H.U. Group Holdings, Inc.
Integrated Report 2023

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

1

Contents
Value
CreationStory

2 What’s in Our Name
5 The H.U. Group’s Businesses
6 Value Creation Story
7 Message from the CEO
11 Our Value Creation Story

Mediumterm Plan
Progress

14 Performance Highlights
17 Medium-term Plan
19 Message from the CFOThis report is designed to communicate to a wide range of H.U. Group
stakeholders the Group’s initiatives to increase its corporate value overthe medium to long term and to promote dialogue. The production
process has involved coordinated efforts from all divisions, including
the Group CEO and the CFO, who is in charge of the report’s
publication. We have gathered important annual information regarding
management strategy and sustainability and focused on ensuring theinformation is connected and concise. Please visit our website for moredetailed information.
WEB

Corporate Website
https://www.hugp.com/en/

WEB

Investor Relations
https://www.hugp.com/en/ir/

WEB

Sustainability
https://www.hugp.com/en/sustainable/

21 Sustainability Management

27 Aiming to Become a Healthcare Innovator—Reforming the H.U. GroupSpecialFeatureEditorial Policy

28 Special Feature: The H.U. Group’s Human Resource Strategy
31 Strengthening Our Innovation Foundation
34 Reforming to Become an Innovator: LTS Business
38 Reforming to Become an Innovator: IVD Business
42 Reforming to Become an Innovator: HS Business

Scope of Report

The business performance data in this report includes consolidated
Group companies. The information on sustainability includes some datafrom outside the scope of the rest of the report. All data are presented
with an indication of the scope covered.

Time Period Covered by Disclosed Information

45 Directors and Officers

Governance

47 Messages from Newly Appointed Outside Directors
48 Corporate Governance
53 Risk Management
54 Compliance

55 Company Recognition/Participation in Initiatives

Corporate
Information

57 Corporate Information

As this report is issued in December 2023, it contains mainly information
on fiscal 2022 (ended March 31, 2023) and the first half of fiscal 2023
(ending March 31, 2024).

Forward-looking Statements

The predicted performance figures found within this integrated reportare based on determinations made by our management team using
information available at present. They were prepared on the basis ofnumerous assumptions and opinions obtained based on informationthat includes enormous risks and uncertainty. Please note that ouractual performance results may differ from these performance
predictions due to a variety of different factors. Factors that could
foreseeably impact our performance include, but are not limited to, a
deterioration of the economic climate, exchange rate fluctuations,changes in legal or governance systems, delays in bringing new
products to market, pressure resulting from the product strategies ofour competitors, decreased selling power for our existing products, andsales discontinuation.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

What’s in Our Name

The aging of populations around the world is expected toaccelerate over the coming half century. As we greet
the era of the 100-year lifespan, it is more important thanever for individuals to actively manage their own health bymaking efforts for disease prevention, early discovery, andearly treatment.
For over 70 years, the H.U. Group has been a leading
company in the testing industry, supporting healthcare in
Japan and worldwide. In 2020, we changed our company
name to indicate our direction going forward as we contributeto the further advancement of healthcare. The “H.U.” in ourname means “Healthcare for You,” expressing ourcommitment to engaging in the health of each individual anddelivering optimal healthcare for everyone. From disease
prevention to treatment and recovery, we will provide
solutions for each phase of people’s health and contribute to
the future of human health and medicine.

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H.U. Group Holdings Integrated Report 2023

Value Creation Story

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Aiming to Be
a Healthcare Innovator
The H.U. Group is shifting its role in society from its former
role of an “entry point to medicine” to a new role as an “entry
point to healthcare.” This challenge means creating newvalue above and beyond what we could have achieved on ourpast trajectory. We believe that this challenge has been madepossible for us because we have established a businessmodel shared by very few around the world, having both the
LTS business, which provides highly reliable testing services,and the IVD business, which supports global medicine
through innovative diagnostic technologies. Moreover, we
also aim to be an innovator providing a total response tosocial issues with the addition of the HS business, where weare developing outsourcing services in the field of treatment
and nursing care with an eye to the progress of at-home endof-life care. While continuing to develop our existing
businesses, we will work together as a single Group to create
new value in healthcare.

3

H.U. Group Holdings Integrated Report 2023

Value Creation Story

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The H.U. Group’s Mission and Vision guide us as we expand the scope of the value we create and contribute to the future of medicine andthe development of healthcare.
By ensuring that all our employees understand our Values and Traits and practice them in their day-to-day operations,
we aim to provide optimal healthcare solutions for everyone.

Group Mission and Vision
MissionCreate new value in healthcare and thereby contribute to human health and the future of medical care

VisionWith our deep involvement in human health, we aim to be a group that contributes tothe development of healthcare through trust and innovation

Values and Traits

Customer Centricity

Creation of New Value

Respond to medical careand healthcare needs,
exceed customer
expectations

Strive for global value
creation first and foremost,take risks to challenge
and innovate
Think and execute with a
global perspective
Lead with result-orientation,
speed and efficiency

Sincerity and Trust
Be sincere and trustworthy,
act with transparency
Communicate openly
and constructively,
beyond boundaries
Gain and maintain trustfrom all stakeholders

Mutual Respect
Respect diverse values,
experience, expertiseand teamwork
Praise and celebrate
challenges and successes
Grow and help others
to grow4

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5

The H.U. Group’s Businesses

LTS

IVD

HS

The H.U. Group leads Japan’s clinical testing market witha share of 23.4%*1 and provides comprehensive testing
services to medical institutions and others through its
nationwide network of laboratories, including the H.U.
Bioness Complex, one of the world’s largest lab facilities.
We have particular strengths in esoteric testing for
examining the cause and progression of disease, and we
receive upwards of 200,000 orders for tests daily, mainly
from major hospitals. We are also focusing on the
introduction of testing services to support advanced
treatments, such as genomic medicine in the fields ofcancer and rare diseases.

We are a leading company in immunoassay reagents,
providing products to over 100 countries worldwide. We
promote R&D through a three-hub structure in Japan,
Europe and the United States, working to create
innovative test reagents for diseases for which there are
not yet effective testing methods anywhere in the world.
Recently, we have been developing our contractdevelopment and manufacturing organization (CDMO)
business model globally through partnerships withoverseas diagnostic reagent companies. Using our highquality raw materials and advanced technologicalcapabilities, we are also striving to create new testing
markets, such as Alzheimer’s disease.

Paving the way to a future where end-of-life care shifts tothe home, the Group is expanding the scope of its
contributions by developing an outsourcing service
business in the medical and nursing care fields. In thesterilization and related services business, we provide
comprehensive solutions to medical institutions, fromsterilization services inside and outside hospitals tosurgical operation support services. In the home-visiting
and welfare business, we provide home-visit services
centered on nursing care equipment rental and home-visit
nursing. Other areas of business include the sale and leaseof medical equipment and medical supplies.

Main products and services

Main products and services

Lab Testing and its related Services*1 S ource: Yano Research Institute “2023 Clinical Laboratory Center
Management Overview”

Main products and services

Testing business (including CRO functions)
Health check-up support business
Food, environment, cosmetics testing business

In-Vitro Diagnostics

Lumipulse®*2 business
CDMO and raw material supply business
Other products*2 Fully automated chemiluminescence enzyme immunoassay system

Healthcare-related Services

Sterilization and related services business
Home-visiting, welfare businessH.U. Group Holdings Integrated Report 2023

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Value Creation Story
The H.U. Group is one of few corporate groups in the world to combine the LTS business, which has the leading share of the Japanese commissioned clinical testing market, and the IVD
business, where it is a leading company in immunoassay reagents. Recently, the HS business, which provides healthcare-related services, was included in the Group, strengthening its structure
for responding comprehensively to customer needs. In addition, guided by the concept that the power of the Company is the sum total of the power of its individual members, we are striving toenhance our personnel systems and training systems to enhance the skills and knowledge of all employees. Furthermore, we fully utilize the human capital and intellectual capital of our Group
companies, aiming to harness synergy effects in order to maximize the value provided to customers.
12 )” and “approval acquisition andIn the LTS business and IVD business, we conduct “early development (     )”of test reagents, then demonstrate their value to realize “development evaluation (     
34item addition (     )”within the Group. We maintain close links, including with H.U. Group Research Institute G.K., which is responsible for corporate R&D functions, to enable “early launch (     )”ofhigh-value-added products and services. During the COVID-19 pandemic, this value creation model was used to rapidly introduce PCR tests and quickly develop and commercialize antigen test
reagents, contributing significantly to solutions for social issues. In addition, integrated sales company H.U. Frontier, Inc. is providing total solutions combining the products and services of the
LTS business, IVD business, and HS business, aiming to increase the corporate value of the Group.

H.U. Group Research Institute

IVD
HS*

1

Basic research
Oversee Group R&D

Intangible assets

Antigen and antibody
technology
Intellectual property

Intangible assets

Sterilization technology
Client assets*2*1 Sterilization and related services in the Healthcare-related Services (HS) business

Platform for testing
Client assets*2 /KOLs*3

Evaluation1

Early launch

2

Early
development

43

Approval
Item addition

In-hospital operation support from
central supply room to operating room
Accumulation of expertise
operating multiple facilities*2 Links with a diverse customer base and associated customer relationships

Comprehensive proposals
through Group synergies

Large-scale testing operation and expertise
Large-scale test data and samples
Client assets*2 / KOLs*3*3 Key opinion leaders

H.U. Frontier

Maximization of value provided to customers

Social infrastructure supporting medicine

Intangible assets

Human capital

Early commercialization of clinical tests

LTS

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Message from the CEO
The H.U. Group is a corporate group that aims toprovide “Healthcare for You,” contributing to humanhealth for all people and the future of medical carethrough our deep involvement in the health of eachand every person. The results of the Group’s
integration strategies for realizing unique value
creation are steadily emerging. We will further
accelerate this activity and reinforce our foundation
for future sustainable growth to set the entire Groupon a growth trajectory.
We aim to address the social issue of a fallingbirthrate and aging population as a corporate groupthat provides healthcare solutions that lead to longer
healthy lives

Shigekazu Takeuchi
Director, Chairman,
President and Group CEO

Three years have passed since we adopted “H.U.” in ourcompany name, representing “Healthcare for You.” Looking backon our progress over recent years, since my appointment aspresident in 2016, we have accelerated the Group integration
strategy and promoted management reforms aimed at new
growth. While engaging with a series of measures within thosereforms, our ideal image of the Company discussed internally
gradually changed towards pursuing greater social value.
One of the issues for society today is the falling birthrate andaging population. If effective countermeasures are not
implemented, there will be unavoidable impacts on our economy
and society, including a worsening shortage of workers as theworking population declines, in addition to burgeoning national
healthcare costs. To respond to this issue, the Company reached
the conclusion that it should broaden its offering of high-quality
products and services to become a corporate group that
promotes the prevention, early detection, and treatment ofdisease, as well as providing solutions that lead to extended
healthy lives. In 2020, we decided to change the company nameto one that embodies our commitment to this direction.
“Healthcare for You,” expresses the Group’s aspiration to
step beyond the role of supporting healthcare centered on theclinical laboratory testing and in-vitro diagnostics businesses toengage with individual consumers and deliver optimal healthcare
to all. The H.U. Group’s Mission is to “Create new value inH.U. Group Holdings Integrated Report 2023

Value Creation Story

healthcare and thereby contribute to human health and thefuture of medical care.”Going forward, as we enter the age of the 100-year lifespan,
we will expand the scope of our contribution to span the processfrom disease prevention to prognosis, in other words, all the
areas that correspond to “Healthcare for You.” In August 2021,
we revised our business segments, making the Healthcarerelated Services (HS) business, which encompasses the homevisit nursing and long-term care business and nursing care
supplies business, a third business pillar alongside the Lab
Testing and its related Services (LTS) and In-Vitro Diagnostics(IVD) businesses. In a super-aged society, we predict that end-oflife care will shift from its traditional setting of a medical institution
to treatment at home. We are combining the Group’s strengths inclinical testing services and home-visit nursing services andcontinuing to develop new ways to support users and theirfamilies. In addition, while our business is primarily based on B2B
services, by expanding our range to include B2C services, we are
striving to create high-value-added products and services that arequick to respond to changes in society. A leading success story
in this regard is our COVID-19 rapid antigen test kit, which wasapproved as an over-the-counter test drug in Japan in October
2022. This test kit was initially approved for medical use in May
2020, becoming the first such device to be approved in Japan.
As it requires no test equipment and can determine results
immediately, it has become widely adopted by generalhouseholds since being repurposed for general use. In addition,
in response to the spread of public awareness that people canconduct testing themselves, we established H.U.POCkeT, Inc.,
which focuses mainly on POCT*1-related business and started
operating from July 2023.
Meanwhile, as medical technology evolves, the Group’s
products and services are also increasing in sophistication andadding higher value. For example, in the area of Alzheimer’s
disease test reagents, which is one of the key initiatives of the IVD
business, we used a technology that can capture microscopic
amounts of components in blood to develop a reagent that can
detect a protein that is considered to be one of the substancesthat cause dementia. We are now preparing to file for approval in
the United States. The conventional testing method of collecting
cerebrospinal fluid is challenging because it burdens the body

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8

significantly and involves highly difficult testing techniques. On theother hand, testing using blood alleviates physical and mental
burdens and can also be expected to reduce costs. Using theresults of cutting-edge R&D to drive the evolution of clinicaltesting services and test reagents leads directly to the Group’s
growth, and we have also considered it our duty since ourfoundation, having looked upon the lives of the individual people
who provide the test specimens.
*1 Point of care testing, a form of simple and rapid testingOver the past three years, we have been steadily
working to reinforce our foundation for growththrough measures such as establishing an integrated
sales company, promoting external partnerships, andconducting M&As in the IVD businessIn the three years since we changed the company name, we havefocused on redefining the Group Mission and Vision andrestructuring the organization, as well as changing the mindset ofour employees. During these three years, we have had threesignificant accomplishments.
The first accomplishment was the establishment of H.U.
Frontier as a centralized sales platform for the Group in Japan.
Previously, Group companies such as SRL, Inc., Fujirebio Inc.,and Nihon Stery, Inc. conducted their sales activities separately
for a single medical institution. The establishment of the newcompany enabled wider extension of the value chain, combining
the various products and services of each Group company basedon customer needs to provide total solutions. By comprehensively
providing multiple products and services, we will continue toincrease their added value and competitiveness, ultimately
securing stable earnings. The effects of centralizing our sales
platform are also apparent in the area of human resource
development. For example, last year, sales personnel from SRL
sat the Diagnostics Medical Representative (DMR) qualification*2
examination, with most of them gaining the certification for use in
their work. Regardless of which company they originate from, I
feel that they are gradually developing a mindset of enhancing
their own capabilities in order to implement the H.U. Group
Values and Traits on the front lines.

The second important accomplishment was the advancementof external partnerships. Until recently, the Group has had astrong inclination towards self-sufficiency, which I feel has
prevented it from fully utilizing its opportunities for growth andefficiency gains. Reflecting on this, we decided to actively
promote external links after identifying the Group’s own corecompetences. In 2022, we established a joint logistics company
called MEDISKET CORPORATION with leading pharmaceuticalwholesaler MEDIPAL HOLDINGS CORPORATION, with whom weare sharing logistics operations for more efficient distributionfunctions. Breaking the conventional industry paradigm of selfsufficiency in logistics, this innovative joint delivery model not only
minimizes logistics costs for both companies, but also helps toreduce CO2 emissions. Moreover, we are also working proactively
on open innovation with academia and start-ups. At H.U. Group
Research Institute, we are currently working on a number of joint
research projects with the goal of generating innovation.
Universities and research institutes aiming to implement theirresearch themes in the real world are extremely attracted to the
H.U. Group’s clinical testing technologies and expertise, and weare seeing an increase in inquiries.
The third important accomplishment came from the M&As of
two overseas companies that were conducted with the aim of

H.U. Group Holdings Integrated Report 2023

Value Creation Story

further growing the IVD business. In July 2022, we acquired ADx
NeuroSciences N.V., a biotechnology company specializing in thefield of neurological diseases, such as Alzheimer’s disease. In
November, Fluxus, Inc., which has been developing a diagnostic
drug platform using ultra-high-sensitivity detection technology
together with Fujirebio, was included in the Group. These M&As
are expected to strengthen our R&D capabilities, which drive thegrowth of our IVD business, and accelerate our global strategy.
We believe they can enhance our competitiveness.
*2 An industry qualification for the role of providing medical professionals such as
clinical testing technicians with medical information regarding clinical test
reagents, aiming to ensure their correct usage and widespread adoption, while
also communicating feedback of information from the medical front lines regarding
the efficacy and safety of clinical test reagents

Impact of COVID-19 on business performance.
Looking ahead, we will focus on further strengthening
the base businesses, aiming for a return to growth
Since the Group operates diverse businesses responding tovarious medical needs, COVID-19 had an extremely large impact
on the Group’s business performance. The impacts were both
positive and negative.
First of all, over the two-year period from fiscal 2020 to fiscal
2021, when the virus was spreading globally, sales and profits
both grew sharply as we expanded our supply of various COVID19-related testing products and services. This is the positive side.
The Group had an advantage with respect to the newly emergent
testing needs thanks to the technology and expertise that we had
accumulated due to the efforts of our predecessors, who had
started internal research into test reagents in alarm over the
SARS (Severe Acute Respiratory Syndrome) virus that spreadoverseas in 2002, and the Zika fever and so forth. In January
2020, when the first COVID-19 case was confirmed in Japan, theGroup began working rapidly to develop a test reagent. At thattime, we found that the genome analysis result of the virus
causing the new respiratory illness was almost the same basesequence as the SARS virus of 2002. We realized, therefore, that
we could reuse part of the antibody that was established 17
years earlier. This history was behind our release of Japan’s first

Medium-term Plan ProgressSpecial Feature

rapid antigen test kit in May of the same year, followed in June by
our release of the world’s first high-sensitivity quantitative antigen
test reagent. These initiatives were well received and contributed
significantly to social activity, such as providing comprehensive
test support including PCR testing at major airport quarantine
stations throughout Japan. I realize that responding to such an
unknown infectious disease by quickly establishing a testing
system and rapidly building a supply system centered on test
reagents and equipment is one of the reasons for the H.U.
Group’s existence.
On the other hand, looking at the negative impacts of the
COVID-19 pandemic, our existing base businesses experienced
a downturn due to factors such as curbs on outpatient visits andother changes in consumer behavior, and a decrease in hospital
admissions in order to save beds for COVID-19 patients. Ourbase businesses have yet to fully recover to the pre-COVID-19
level of fiscal 2019. Moreover, after growing through fiscal 2020and fiscal 2021, sales of COVID-19-related tests and products
have been in decline. As these factors compounded, werecorded decreases in sales and profits for fiscal 2022. During
the three-year COVID-19 pandemic, we have worked tostrengthen the earnings base for each business. Now we must
accelerate our initiatives even further for growth over the medium
to long term.

Fiscal 2022 Kick-off Meeting and Annual Award Ceremony (June 2023)

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9

We see fiscal 2023 as the time to put our focus onto
strengthening our existing base businesses and returning them togrowth. In the commissioned clinical testing market, existing
testing services could become more simplified with theprogression of birthrate decline and population aging.
Accordingly, in the LTS business, we need to constantly create
new test items while retaining market share. It is particularly
essential to expand our test items in the area of cutting-edge
medicine, and we will continue to invest management resourcesin R&D activities. In the IVD business as well, it is vital that weconstantly conduct R&D and commercialization of new test
reagents. We will build our track record for Lumipulse® in Japanand accelerate our cycle of expansion into the contractdevelopment and manufacturing organization (CDMO) business,while globally expanding our lineup of test reagents.

We will realize a sustainable and healthy future as ahealthcare innovator, inspired by society’s expectations
The H.U. Group’s intangible assets are essential for increasing its
corporate value in the future. In particular, we seek to draw out
as much potential value as possible from our intellectual andhuman capitals.

H.U. Group Holdings Integrated Report 2023

Medium-term Plan Progress

Value Creation Story

Intellectual capital is managed centrally by H.U. Group
Holdings, which works to ensure that it is appropriately protected
and used effectively within the Group. In the LTS business, ouraim is to acquire technologies and specialized skills that will
enable us to provide high-value-added testing services. These
include companion diagnostic-related testing and genome
analysis, which are essential for precision medicine.*3 We plan to
use these intellectual properties strategically as the source ofgaining a competitive advantage. In the IVD business, we will
increase our efforts to research and develop test reagents,
contributing to the advancement of medicine through thedevelopment of products that are exclusive to the H.U. Groupand have high clinical utility. Furthermore, to strengthen the
research side of R&D, H.U. Group Research Institute is promoting
broad basic research to create future seeds. Strengthening
intellectual capital will also have a positive impact on partnerships
with external organizations. We will continue to focus on
intellectual property, not only in the form of patents to protect ourown technologies, but also as a catalyst for co-creation.
Meanwhile, in our efforts to create systems for maximizing thevalue of human capital, we recognize that we are currently in asituation where we must fundamentally break away fromtraditional Japanese employment practices, such as lifetime
employment and a seniority system. Moreover, the Group’s
personnel philosophy is that the power of the Company is thesum total of the power of its individual members. Guided by thisphilosophy, we plan to create a new personnel system forenhancing individual capabilities and skills. Some of the programs
will begin in fiscal 2023, with full-scale operation scheduled to
begin from fiscal 2024. Our primary focus in designing the system
has been management training. First, in the management
evaluation system, we will clarify the role requirements for
managers along with specific expected behaviors. In addition, we
will renew the content of management training to foster thedesired mindset and help people break away from non-leadershipstyle thinking. A particularly important point is the ability tocommunicate with subordinate team members. It is importantbecause neglecting day-to-day communication can lead to an
inability to draw out honest self-disclosure from team members

Special Featureand the failure of organizational operations. Other thanstrengthening this kind of management training, we will also
revise various systems, such as the grading system andcompensation system. We aim to develop human resources whowill build their careers independently, autonomously, and on theirown responsibility to take the Group into its next phase.
Seven years have passed since I was appointed president.
One thing I have observed is that the key to realizing integrated
management for the Group lies in changing the mindset of
employees. Our people’s awareness has been reformed to thepoint where retired employees who had a strongly conservativemindset and who know the Group as it was in the past

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commented on their surprise at how much things have changed.
Moreover, as our day-to-day initiatives driven by this awarenessreform are promoted, we have recently seen a rapid rise in theGroup’s evaluation from ESG rating agencies. Therefore, I am
keenly aware that we must fulfill our responsibility to society evenmore than before.
The Group’s management reforms will transition from thefoundation strengthening phase to a growth phase as we
advance. Inspired by society’s expectations, we will realize asustainable and healthy future as a healthcare innovator.
*3 M
 edical care that is individualized and optimized based on detailed information
including the patient’s genetic information

Intellectual Property and Intangible Assets ofthe H.U. Group
Preparation
technology
for highperformance
antibodies

A widevariety ofcell lines

Extraction
technology
for antigens/antibodies
Preparation
technology
for high specificactivity labelled
antibodies

Sterilization
technology

Intellectual
property andintangible assets ofthe H.U. Group

Nextgeneration
technology

Platformfor testing

Members of the second class of H.U. Business College
Operation forlarge-scaletesting

Brand

Client assets /
KOLs

IVD
LTS
HS
Common in the Group10

Test data
DesignNew offices at the head office after relocation in May 2023

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Our Value Creation Story
From Foundation to Management Integration
The H.U. Group’s parent company was Fujizoki Pharmaceutical(currently Fujirebio), which was founded to manufacture and sell
pharmaceutical products in 1950. In the mid-1960s, we started
work on development of test reagents, and in 1966 succeeded indeveloping the world’s first clinical test reagent for syphilis, a disease
for which there was no reliable method of diagnosis at the time.
Continuing from this success, we applied the principle of passive(indirect) agglutination, which we had cultivated with this product, toadvance our R&D on test reagents for autoimmune diseases andinfectious diseases. We grew to become a leading company in thefield of immune serum. We started expanding overseas in 1970,
aiming to become a global life science company.
Subsequently, Fujizoki Pharmaceutical diversified its businesses
using the technologies it had cultivated in the In-Vitro Diagnostics
business. At this time, the Company divested its blood bankbusiness, which had been a core business, and it needed to explore
different paths as a matter of survival. The Company’s first step wasto establish a new company, Tokyo Special Reference Laboratories(currently SRL), for providing commissioned clinical testing services.
Despite being an industry latecomer, having started business in 1970,
by focusing its business on the field of esoteric testing, the company
steadily expanded its market share, mainly among university hospitals
and national hospitals. Later, the company expanded its businessdomain to encompass general testing and grew to become thelargest clinical laboratory testing company in Japan.
In 1999, SRL established Care’x, Inc., a nursing care equipment
rental company, jointly with Mitsui & Co., Ltd. In 2000, Nihon Stery,which offers sterilization services for medical devices and equipment,
became a wholly owned subsidiary under the umbrella of SRL.
Then in 2005 Miraca Holdings, Inc. was founded through thereintegration under the holding company of Fujirebio and SRL after
35 years. The Company name “Miraca” was created as an acronymof the Japanese words for “future” and “science” to express theintention of applying and developing science that is constantly one
step ahead. The Company aimed to provide high-value-added
testing technologies and services.

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2000 S old the pharmaceutical business1998 A cquired the diagnostic reagent business unit of U.S. company Centocor
Diagnostics and changed the company name to Fujirebio Diagnostics, Inc. (FDI)(Stepping stone to entry into the raw materials supply and CDMO businesses)

Fujirebio

1997 Developed and started sales of test reagent ESPLINE® HBsAg/Ab
1992 Developed and started sales of fully automated chemiluminescence enzyme
immunoassay system LUMIPULSE® 1200 (Transition from manual to automated)1987 Listed on the first section of the Tokyo Stock Exchange
1983 Company name changed to Fujirebio, listed on the second section of the Tokyo Stock Exchange
1977 Developed and started sales of test reagent SERODIA® HBs for detecting HBs antigen for hepatitis B virus
1966 Entered the diagnostic reagent sector
Developed and started sales of the world’s first clinical reagent for syphilis

1964 The Japanese government adopted a resolution to secure blood for transfusions through blood donations(Policy change from private-sector blood banks to public blood donation operations)1954 Entered the blood bank businessStarted providing blood for transfusions

2005

1950 Fujizoki Pharmaceutical founded to manufacture and sell pharmaceutical products
1970 Tokyo Special Reference Laboratories founded as part of a drive to diversify the business of
Fujizoki Pharmaceutical

Miraca Holdings
founded throughbusiness integrationof Fujirebio and SRL

1974 Started commissioned chromosome testing1982 Entered the clinical testing market
1987 Established Japan’s first genetic testing laboratory
First in Asia to acquire CAP (College of American Pathologists) accreditation

SRL

1989 Changed the company name to SRL
1990 Listed on the second section of the Tokyo Stock Exchange
1997 Established SRL Medisearch, Inc.
1999 Established joint nursing care equipment rental business (Care’x) with Mitsui & Co., Ltd.
2000 Acquired certification for ISO 14001, an international standard for environmental
management systems
Participated in management of sterilization service (Nihon Stery)
2001 L isted on the first section of the Tokyo Stock Exchange

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Governance

Changed segments
Consolidated net sales (¥ billion)

Consolidated operating profit (¥ billion)

137.2

143.3

145.3

13.3

14.5

14.8

14.9

2005

2006

138.4

Company name changed to H.U. Group Holdings
Established H.U. Frontier

272.9

149.1
19.8

165.7

175.4

21.3

23.2

192.2
25.6

203.4

204.7

26.7

27.0

211.7

26.1

204.2

260.9

223.0
195.4

181.4

25.4

14.6

23.4

9.9

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

12

H.U. Frontier was established as an integrated sales
company that leverages our wide-ranging value chain
to provide one-stop solutions for medical institutions’issues. We are building a platform for sharing
information about markets, products, and technologies.

50.5

188.7

28.1
17.6

Contents

Through H.U. Group Research Institute G.K., weorganically connect the Group’s R&D resources,
shortening the cycle from development to validationand product creation. We are strengthening external
collaboration to promote commercialization of thelatest technologies.

Started integration strategy, positioned as a second founding
Established Miraca Research Institute G.K.
(currently H.U. Group Research Institute G.K.)

Established Miraca Holdings
Transition to company withcommittees (currently company
with three committees)

Corporate Information

2020

2021

We are promoting work style reforms andinfrastructure upgrades designed to create concepts
based on an awareness of the entire Group andinnovation not bounded by industry practices. We will
execute a series of measures aimed at creating links
across organizational boundaries.

2022 (FY)The Second Founding — Establishment of H.U. Group Holdings
From 2000 through the 2010s, the commissioned clinical testing
industry established its social role as an important supporting
infrastructure for healthcare. However, market growth stagnated dueto the suppression of medical fees and other factors. The businessenvironment has changed dramatically due to factors such asincreases in social security costs associated with the declining
birthrate and aging population in Japan, the advance of personalized
medicine leading to longer healthy lives, and an increase in demand
for advanced medical care.
In response, the H.U. Group used these changes as opportunities
for reform and started work on radical restructuring, positioning2017 as a “second founding.” We conceived a completely original
business model that would enable test reagent manufacturers andclinical testing centers to work together and create synergies. We
made proactive investments to promote further growth in areas suchas human resources, R&D, and automation equipment. In addition,
to establishing a foundation for our Group integration strategy, we
promoted internal transactions. By introducing LUMIPULSE®* ateach of SRL’s laboratories and other facilities, we strengthened theconnection between the LTS and IVD businesses even further andenhanced the Group’s cash flow generation capability. Other reforms
included consolidating the back-office divisions of our main
operating companies, creating systems to encourage the flow oftalent within the Group, and unifying internal rules.
In 2020, the major reform measures started to bear fruit as acommon platform promoted between the three main Group
companies began to take shape, and the Company changed its
name to H.U. Group Holdings. By changing the name of theCompany, we demonstrated to those inside and outside theCompany our management policy of seeking to expand our businessfrom medicine into healthcare, as well as the Group’s new Mission
and Vision. In 2020, we also established the Research andDevelopment Strategy Division to unify the R&D organizations of theentire Group. We built a structure for organically linking the resourcesof each business and promoting the creation of innovation. H.U.
Group Research Institute G.K. is the center of the corporate R&D
functions and is strengthening basic research activities that
contribute to medium- to long-term growth. In addition, in October
2020, we established H.U. Frontier, which integrates the sales
functions of each Group company, with the aim of maximizing thevalue to customers through one-stop provision of a variety of
products and services to address medical institutions’ issues.
In 2021, we changed our business segment structure to threesegments: the Lab Testing and its related Services (LTS), In-Vitro
Diagnostics (IVD), and Healthcare-related Services (HS). We areworking to strengthen their business foundations and accelerate
their growth. Moreover, in May 2023, we started full operation of the
H.U. Bioness Complex, a complex facility that includes one of thelargest clinical testing laboratories in the world, which we haveconstructed in Akiruno City, Tokyo Prefecture. The facilities and coresystems used at our Hachioji Laboratory have been renewed at the
H.U. Bioness Complex, setting up a 24-hour operation for our
automated production lines. Through measures such as these, we
expect to enhance operation efficiency and reduce fixed expenses.
The H.U. Bioness Complex also functions as a research base forcreating testing technologies that will support next-generation
medicine, such as genome and regenerative medicine.
* A proprietary testing device of Fujirebio that is able to automate the majority ofprocesses involved in immunoassays using Fujirebio’s reagents

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

13

Examples of Value Creation

Leveraging the Group’s Combined Capabilities toHelp End the COVID-19 Pandemic

A New Stage of Value Creation with the Full Operation of the H.U. Bioness Complex

By leveraging to the maximum the accumulated technologies andknow-how of the Group, in the spring of 2020, we successfully
developed a PCR testing system for COVID-19 infection and a rangeof antigen test reagents ahead of our competitors. Since then, ourefforts to support people facing the global pandemic have included
offering greater convenience with saliva tests and developing a test
kit that can test simultaneously for the influenza virus.
We were able to organically combine our knowledge of highsensitivity quantitative antigen testing and PCR testing methods inthe successful development of the DX-based testing system forpandemic response, which can perform mass screening for infectious
diseases within a short period of time. This system has been used ina wide variety of settings where stable testing at high volume isrequired, such as airport quarantine operations, major public events,and mass screening projects. In this way, it played a major role in theresumption of normal social and economic activities.

The H.U. Bioness Complex is the central facility of the H.U.
Group. It covers an area of approximately 122,000 m2(around 2.7 times the size of Tokyo Dome) and includes the
R&D Building and a testing laboratory. This facility is one of
the largest of its kind in the world. It is designed to increase
both the quality and efficiency of testing by preventing humanerror through the use of IT and AI. The complex has thecapacity to process more than twice as many as our existing
facilities, mainly due to a 24-hour operation system using
automated lines.
In the R&D Building, researchers from each operatingcompany gather, creating an environment conducive toactive exchanges between personnel and open innovation asa base for value creation that is closely linked with people’s
lives. At the same time, it also functions as an innovation hubthat promotes H.U. Group Research Institute G.K.’s missionof basic research in the life science domain andcommercialization of research results.
To uphold our social responsibility of “never let testing
stop,” the facility has business continuity plan (BCP) features
such as anti-seismic, earthquake-resistant construction,
emergency power generators, and water tanks, and we havecreated systems to enable testing to continue for three days

DX-based Testing System for Pandemic Response
Design and development of uniquelaboratory systems
Development and stable supply of highperformance reagents and instruments
Operational optimization and stable operation

Sample receipt

Automatedpreprocessing

even in a major disaster. Moreover, our previous testing labs
have had a strong image of being closed off, and in order tochange this, we hold facility tours for a wide range ofstakeholders, including people from medical institutions,educational institutions, and local residents.
We will look to accelerate the rebuilding of a nationwide
testing system centered on the H.U. Bioness Complex as wellas our facilities in Kansai and Fukuoka. In doing so, we willfurther promote initiatives to establish our unique position.

H.U. Bioness Complex Testing Laboratory Building (left) andR&D Building (right)

Rapid result
reporting
Quantitative
antigen testing

PCR
testing

Digitalization and data integration
AI-based quality assurance
Data-based laboratory management

Fiscal 2023 R&D Results Reporting
Meeting

Technology Day 2022

AkirunoCube Sakura Festival 2023

H.U. Family Day @AkirunoCube

H.U. Group Holdings Integrated Report 2023

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Special Feature

Medium-term Plan Progress

GovernanceCorporate Information

14

Contents

Performance Highlights
Fiscal 2022 Performance
In fiscal 2022, consolidated net sales decreased by 4.4% year on
year to ¥260.9 billion. By segment, although the base businessincluding gene-related testing such as cancer genome testing grewin the LTS business, the decrease in sales of COVID-19-related tests
such as PCR tests and testing support in airport quarantine stations
was the main factor resulting in decreased revenue. Meanwhile, in
the IVD business, although there was a slight decrease in net salesof COVID-19-related products, revenue increased due to growth of
the base business including the impact of foreign exchange rates.
Consolidated operating profit decreased by 53.7% year on year to¥23.4 billion due to factors such as increases in temporary expenses
and running costs associated with the operation of the H.U. BionessComplex in the LTS business, and the impact of the revision of
medical service fees centered on PCR testing. Ordinary profit
decreased by 53.6% year on year to ¥22.0 billion mainly due to thedecrease in operating profit, and net profit decreased by 47.0% to¥15.7 billion mainly due to the decrease in ordinary profit despite again on sale of non-current assets being posted as extraordinary
income. As a result, ROE decreased by 12.4 points from theprevious fiscal year to 10.8%.
Meanwhile, cash flows from operating activities decreased by
41.1% to ¥32.5 billion. Over the three years from fiscal 2020 to fiscal
2022, a total of ¥123.4 billion in operating cash flow was generated,and ¥78.0 billion of this was allocated to capital investment centeredon the LTS business. In addition, there were cash outflows such as
acquisitions in the IVD business, and cumulative free cash flow overthree years was ¥34.6 billion. The target for the current mediumterm plan is for cumulative operating cash flow of ¥150.0 billion andfree cash flow of ¥50.0 billion over five years, and we believe this is alevel that can be achieved over the remaining two years.

Consolidated Management Indicators

Net Sales

Operating Profit(¥ billion)(¥ billion)

272.9

300.0

60.0

260.9

50.5

223.0
195.4
200.0

181.4

188.7

40.0

25.4
100.0

0

20.0

2017

2018

2019

2020

2021

2022

(FY)

ROE

2017

14.6

2018

23.4

9.9

2019

2020

2021

2022

(FY)

Cash Flows(%)(¥ billion)

30.0

55.2

60.0

23.2

35.6

40.0

16.0

20.0

10.8

20.0
0

0.2
0

–0.5
2017

2018

2019

15.8

16.2

15.2
7.3

–5.8

2021

2022

(FY)

–40.0

3.0

–6.5
–18.7

–20.0
2020

32.5
24.4

5.7

10.0

–10.0

0

17.6

2017

2018

2019

Cash flows from operating activities

2020

2021

Free cash flow

2022

(FY)

H.U. Group Holdings Integrated Report 2023

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15

Financial Indicators
FY2017FY2018FY2019FY2020

FY2021

FY2022

Net sales(¥ million)

195,400

181,415

188,712223,016

272,944

260,908

EBITDA*(¥ million)

27,287

24,353

21,27037,887

65,11843,076

Operating profit(¥ million)

17,648

14,6489,939

25,39250,49023,381

Ordinary profit(¥ million)

16,567

11,524

6,468

25,45847,42222,010

Profit (loss) attributable to owners of parent(¥ million)

257

6,386

–516

17,46829,59915,676

Total assets(¥ million)

176,068

201,234

219,403

252,751

286,587

297,924

Net assets(¥ million)

113,225

112,973

103,228

115,298

140,178

150,047

Net cash(¥ million)

16,144–13,187–29,156–22,769–10,841–19,514

Cash flows from operating activities(¥ million)

15,767

16,244

15,22935,58855,22932,535

Cash flows from investing activities(¥ million)–21,552–34,902–21,761–28,273–30,862–29,583

Cash flows from financing activities(¥ million)–9,63531,9738,234–1,566–21,725–5,757

Cash and cash equivalents at end of period(¥ million)

20,44433,68836,22642,95046,47944,185

Operating margin

(%)

9.0

8.1

5.3

11.4

18.5

9.0

ROE

(%)

0.2

5.7

–0.5

16.0

23.2

10.8

ROA

(%)

8.5

6.1

3.1

10.8

17.6

7.5

ROIC

(%)

7.2

6.3

3.7

8.7

15.4

7.0

Equity ratio

(%)

64.2

56.0

47.0

45.6

48.9

50.3

Basic earnings (loss) per share

(¥)

4.51

111.94–9.06

306.38519.55275.52

Net assets per share(¥)

1,979.78

1,980.27

1,809.18

2,020.01

2,463.33

2,635.26

Research & development expenses(¥ million)

5,365

5,937

5,514

5,944

7,281

9,556

Capital expenditure(¥ million)

26,221

17,76818,83327,37541,65422,558Depreciation(¥ million)

7,842

8,692

10,432

12,091

14,527

19,491Dividend payout ratio (consolidated)(%)

2,882.5

116.1

―

47.1

24.1

45.4

Dividends per share

(¥)

130

130

130

144

125

125

Number of shares issued(Shares)

57,334,183

57,361,385

57,387,861

57,416,407

57,446,657

57,471,867

Number of treasury shares at end of period(Shares)

253,080

404,381408,064

389,287

569,941

561,968* EBITDA = Operating profit + Depreciation + Amortization of goodwill

H.U. Group Holdings Integrated Report 2023

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Contents

16

Non-financial Indicators
FY2017FY2018FY2019FY2020

FY2021

FY2022(t-CO2)

370,809388,459

364,653

478,054497,811

530,672

Scope 1(t-CO2)

11,221

10,712

11,162

13,19913,88013,418

Scope 2(t-CO2)

24,912

22,82222,08826,29527,57132,641

Scope 3*2

(t-CO2)

334,676354,925

331,403438,560

456,360

484,614(GJ)

692,643

661,788672,231

841,186

977,461

1,062,611(GJ)

501,821481,095

484,820

620,826

740,279

829,542(GJ)

87,04286,654

92,596

111,830

112,362

95,990

(t)

3,467

3,581

3,494

3,452

3,755

4,026

Greenhouse gas (GHG) emissions (Scope 1, Scope 2 and Scope 3)*1

Energy use*3
Environment

Electricity use*3

Gasoline use*3
Amount of waste generated
Total recycling rate of waste plastic*

4

Water used
CDP climate change score*5

SocialEmployees*7

66

68

71

74

76

86

(1,000 m3)

392

374

399

392

390

420

F

F

C

C

A–

A–

—

Number of suppliers performing risk assessment*(Companies)

―

―

89

33

23

85

Percentage of suppliers performing risk assessment*6

(%)

―

―

100

54.1

88.5

100

Reported cases of child labor at suppliers(Number)

0

0

0

0

0

0

Reported cases of forced labor at suppliers(Number)

0

0

0

0

0

0

Average age(Years old)

42.9

42.5

40.0

41.2

41.9

42.1

Average employment year (male/female)(Years)14.2/10.6

14.3/11.1

13.0/10.0

13.5/11.2

13.0/11.3

13.6/11.8

Gender ratio (male:female)

(%)

63:37

64:36

57:43

55:45

56:44

55:45

6

Business
partners

(%)

(%)

―

―

―

16.8

18.6

20.2

(%)

11.8

14.1

14.2

13.4

12.2

14.7

Percentage of females in new graduate hires

(%)

57.6

62.6

69.8

64.2

45.3

52.8

Percentage of employees returning to work after maternity / parental leave

(%)

100

90.6

97.0

97.9

98.8

99.1

Average monthly overtime hours(Hours)

21.5

19.0

21.0

16.9

20.4

16.0

Percentage of female managers*

8

Japan

Applicable range
Environment: Aggregated results of Japanese Group companies subject to internal control evaluation up to
fiscal 2019; and of Japanese and overseas Group companies subject to internal control
evaluation from fiscal 2020.
Social: Aggregated results of the three core companies up to fiscal 2018; of Japanese Group companies
subject to internal control evaluation in fiscal 2019; and of Japanese and overseas Group companies
subject to internal control evaluation from fiscal 2020.

*1 Based on Ministry of the Environment database: Emission Factor Database on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain*2 Target items calculated based on Scope 3 items of the GHG Protocol*3 Calculated by converting to crude oil*4 Item specialized in Japan*5 Answers submitted since fiscal 2019
*6 Suppliers at 80% sales coverage of each of the applicable ranges*7 Full-time employees*8 Managers and above

H.U. Group Holdings Integrated Report 2023

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Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

17

Medium-term Plan
Progress of the Medium-term Plan, H.U. 2025—
Hiyaku (Significant Growth) & United

The first is cost-of-sales reduction through stable operations andautomation at the H.U. Bioness Complex. In general testing, thecomplex will be able to process a high volume of tests throughautomation and 24-hour operation, while in esoteric testing, it will beequipped to handle the most advanced test items. By deploying AI,
robotics, and related technologies, the new facility will pursue drastic
improvements in operational efficiency.
The second is enhanced profitability in the LTS business. In
addition to the SRL Advanced Lab. FMA, which was renewed andrelocated to Fukuoka City, Fukuoka Prefecture, and the H.U.
Bioness Complex in Akiruno City, Tokyo Prefecture, in fiscal 2026,
we plan to establish the New Kansai Lab in Kameoka City, Kyoto
Prefecture. We will concentrate testing at these three sites and work
to build a stable testing structure and improve profitability. In
addition, we will optimize logistics costs by establishing joint logistics

The Company has been promoting the medium-term plan, H.U.
2025—Hiyaku (significant growth) & United, covering the period fromfiscal 2020 to fiscal 2024, with the aim of achieving rapid andsustainable growth in the future. Over the three-year period up to
fiscal 2022, as the spread of COVID-19 dramatically exceeded initialexpectations and became prolonged, the H.U. Group worked
together to supply test services and products, which contributed
significantly to business performance. Meanwhile, the H.U. BionessComplex, which is positioned as the most important initiative in thecurrent medium-term plan, commenced full operations in May 2023
despite partial postponement of the plan.
Under this plan, we are focusing on the following four key measures.

Medium-term Plan Progress
FY2020COVID-19
Status at
the time ofplan
formulation

H.U.
Bioness
ComplexKeymeasures

COVID-19

Current
statusKey Measures in the Medium-term Plan
FY2021

FY2022

FY2023Contribution to early subsidence

FY2024

1. Cost-of-sales reduction through stable operations and automation at the H.U.
Bioness Complex
2. Profitability improvement in the LTS business
3. Group integration in core businesses (Integration of sales forces, expansion ofinter-segment sales, enhancement of R&D)
4. Expansion of CDMO business in the IVD business

Full operation to start in January 2022
Reorganization ofConversion oflabs nationwide
regional labs into
Logistics cost reduction STAT labs

New Kansai Lab

Significantly more widespread and prolonged thanenvisaged at the time of medium-term plan formulation
Significant contribution to performance

H.U.
Bioness
ComplexKeymeasuresoperations in alliance with MEDIPAL HOLDINGS, consolidatinginternal Group collection operations and amalgamating facilities.
The third measure is to promote the Group integration strategy. In
October 2020, H.U. Frontier, Inc. was established through the
integration of the domestic sales departments and marketing
departments of SRL, Inc., Fujirebio Inc., and Nihon Stery, Inc. H.U.
Frontier will provide a wide range of services and total solutions in
response to customer needs, including lab testing services, themanufacture and sale of IVD products, and sterilization services, aswell as seeking to maximize the value provided to customers. In
addition, the Group will improve cash flow by promoting intersegment sales, while accelerating the flexible introduction anddevelopment of technology by integrating R&D functions within theGroup.

Full operation started in
May 2023
Deterioration of fixed cost structure, despite some progressContinued focus on growth strategies based on changes inbusiness environment

FY2022 Performance and Medium-term Plan Targets
FY2022 performance

FY2024 targets

Consolidated net sales CAGR

11.4%*

6% or more

Consolidated operating
profit margin

9.0%

10% or more

ROE

10.8%

12% or more

FY2020–2022(cumulative performance)

FY2020–2024(cumulative target)

Cash flows from operating activities¥123.4 billion¥150.0 billion or more

Free cash flow

¥34.6 billion¥50.0 billion or more

1

*1 CAGR vs. FY2019

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Finally, the fourth key measure is expansion of the CDMO
business within the IVD business. To realize global growth, we willcontinue to work to enhance and expand the CDMO business byleveraging the reliability and reputational advantage based on our
successful track record for Lumipulse® products in the LTS
business and by utilizing our high-quality material and reagent
development abilities in the immunoassay field, which is a strengthof the IVD business.
Recently, we have seen a decrease in testing demand following
the subsidence of COVID-19, expenses arising in relation to theoperation of the H.U. Bioness Complex, and constant increases in
fixed costs, among other factors. Nevertheless, we are making
steady progress on the four key measures. We will continue to focus
on executing growth strategies while considering changes in thebusiness environment in order to achieve our quantitative targets forfiscal 2024, the final year of the current medium-term plan.

Allocation of procured funds

0

2018

2019

2020

2021

IT systems

2022

8,590
999

Subtotal

24,9230923

Testing machine

2,179

Central specimen
storage

1,118

Software13,259Other equipment

440

Overview of actually invested R&D

 &D for response to COVID-19 testing and various
R
technologies to prepare for the next pandemic
 &D for promotion of test automation, mechanization,Rand digitalization
R&D for new AI technologies utilizing medical information
 &D related to new modalities (microbiomes, exosomes,Retc.) needed for advanced medicine
R&D for technologies related to regenerative medicine
 &D related to next-generation omics analysis, long-readR
sequencing and other next-generation genomic analysis
technologies
R&D for building genome diagnostic platform
Strengthening of open innovation(FY)Outcome indicators (R&D)
R&D progress status(¥ million)

Cases that resulted in commercialization

Number of papers announced • Conference presentations: 31
and conference presentations(Japan and overseas)

30,00019,491
20,000015,334

R&D

Depreciation

10,000Equipment and IT system
newly installed at
H.U. Bioness Complex(up to operation in FY2022)

Reception equipment

Balance as of the end of FY2022
2017

*2 F
 und procurement with limited uses, such as business that contributes to theresolution of social issues or initiatives aimed at achievement of or contribution to
the SDGs

Investment
amount(¥ million)

H.U. Bioness Complex

22,55817,768 18,833

20,00024,923Equipment

27,37518

Output report

Amount(¥ million)

Item

60,00026,221

Contents

Social Finance Reporting

Expenditure from FY2019 toFY2022 (actual)

40,000

Corporate Information

addition, the Group undertook long-term borrowing in March 2020
through an SDGs social loan.*2
Furthermore, the allocation of funds procured in fiscal 2022 and thereporting of outputs and outcomes are as shown in the table below.

In October 2019, the Company issued a social bond (unsecuredbond) to procure funds for the installation of testing equipment andan IT system for use at the H.U. Bioness Complex, which started
operation in May 2023. The funds were also to be used for R&D to
improve testing quality and establish innovative technologies. In

Capital Expenditure

41,654GovernanceSocial FinanceAmount procured(after deduction of expenses
from social bonds and loans)(¥ million)

Special Feature

Medium-term Plan Progress

7,842

8,692

2017

2018

10,432

2019

12,091

2020

14,527

2021

2022

(FY)

Number of
research-related contracts• Contracts within the Group: 12• External commission contracts: 37• New joint research contracts: 12• New non-disclosure agreements: 32

Number of patentapplications• 7 (new applications in Japan)

 ontinued to develop, introduce, and implement various types of technologyCfor variant monitoring for COVID-19 testing at the request of the Japanese
government. Constructed a stable COVID-19 genome analysis system andcontinuously conducted over 35,000 measurements together with SRL, Inc.
 sed technologies to adopt mechanization, AI, digitalization, and devices toUpromote support for efficiency and productivity gains in the LTS business.
Promoted support for selection of reagents with low environmental impact
and device development for plastics that are consumed in large quantities inthe LTS business, with an eye to the SDGs.

H.U. Group Holdings Integrated Report 2023

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Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

19

Message from the CFO
We will firmly embed a cash flow-focused approach in the Company while promoting investment with a stronger
emphasis on returns and management with an awareness of the cost of capital. We will revise the hurdle rate forour investment criteria to select investments with high returns. Our aim is to improve profitability, mainly in the LTS
business, and to achieve our five-year cumulative cash flow target.
A Group-wide effort to increase corporate value overthe medium to long term by generating returns thatexceed the cost of capital
The Company’s organizational structure is arranged from theperspective of integrated Group management, with the CFO
overseeing accounting, finance, procurement and legal affairs, aswell as public relations and sustainability. Procurement cost
reduction and support for inventory optimization, which areessential for individual business management, also come underthe management of the CFO. I also supervise the improvement ofprocurement operations based on the purpose and effect of eachbusiness and the countermeasures for sustainability risks at our
suppliers, while working to reduce costs and risks. For example,
we reduced the cash conversion cycle (CCC) and improved cash
flow by optimizing our entire supply chain, including an

across-the-board revision of our approach to manufacturing,sales, and inventory management.
We are embedding this kind of cash flow-focused approach in
the Company, while promoting management with an awarenessof capital cost. In this regard, one of the roles of the CFO is to
examine individual investment plans to see whether they aregoing to generate sufficient profit. As an indicator for this, wehave set a hurdle rate linked with the weighted average cost ofcapital (WACC) to make investment decisions. We strive topromote investment with an awareness not only of sales andprofit levels, but also the cost of capital. The entire Group is
working to increase corporate value over the medium to longterm by generating returns that exceed WACC. In February 2023,
we revised the hurdle rate for our investment criteria, considering
the changes in the market environment, and we have formulated
an investment plan that we expect to provide higher returns thanFY2020 to FY2022 (Three-year) Cumulative Cash Flow (Capital Allocation)(¥ billion)

FY2022 Operating CF:
32.5
Cash flows from operating activities

Atsuko Murakami
Executive Officer and CFO

Three-year cumulative: 123.3

Others: 11.9

Free cash flow

Dividends: 22.6

Three-year cumulative: 34.5

Other investments: 10.8

Corporate: 6.3
HS: 4.8

FY2021 Operating CF:
55.2

Medium-term target: 150.0(progress rate: 82%)

IVD: 21.7
Capitalexpenditure:
78.0

FY2020 Operating CF:
35.6

Medium-term target: 50.0
(progress rate: 69%)

Cash flows from investing activities
LTS: 45.2
Three-year cumulative: 88.8

H.U. Group Holdings Integrated Report 2023

Value Creation Story

before. Investment decisions on each prospective investment are
made by the Investment Committee. The committee is composedof members from several divisions, including the Corporate
Management, Corporate Planning, Accounting and Finance, andProcurement Divisions. It examines the appropriateness anddiscussion points for each investment proposal to strengthen the
pre-screening function, and it also carries out monitoring afterinvestment execution.

Cash flow, a key indicator, is performing steadily. We
will enhance our earning capability by promoting key
measures in each business domain
Our financial strategy in the current medium-term plan is to focus
on stable generation of operating cash flow and strengthening oursound financial foundation over the medium to long term. CCC
improvement is also one of our strategies for generating operating
cash flow. Our current medium-term plan has five-year cumulative
targets of ¥150.0 billion or more for operating cash flow and ¥50.0
billion or more for free cash flow. We think that it is more
appropriate to use a multiple-year result rather than a single year
for evaluating cash flow correctly. The figure on page 19 show ourcumulative results for operating cash flow and free cash flow fromfiscal 2020 to fiscal 2022. Looking at the progress rates on these

Medium-term Plan ProgressSpecial Featuretargets, it is clear that we are making steady overall progress.
Naturally, our sources of cash are profits from our businessactivities, and improving profitability should therefore be a priority.
Lifting profitability in the LTS business in particular is our mostimportant task. In May 2023, the H.U. Bioness Complex began
full operations. Despite increased costs related to general testingin fiscal 2023 and concerns that the emergence of effects could
be delayed, we expect to obtain some cost reduction effects fromfiscal 2024 onward. In the area of esoteric testing, we also plan toincrease operational efficiency through the introduction ofadvanced equipment and AI technology. Furthermore, we will
promote efficiency gains by consolidating testing operations
previously undertaken by regional laboratories and working to
reduce costs related to shipping and logistics.
Meanwhile, we have positioned the IVD business as a growth
segment, and we are focusing on expanding the contractdevelopment and manufacturing organization (CDMO) business,where we can fully leverage the Company’s distinctive
technological capabilities. We will also work on increasing ourpresence in the Alzheimer’s disease testing market, where
demand is expected to grow. In addition, we are contributing to
improvements in asset efficiency, such as manufacturing process
innovation and reducing the CCC through inventory optimization.
The acquisitions of ADx NeuroSciences N.V. and Fluxus, Inc. infiscal 2022 were M&As that matched our financial strategy for

Financial Discipline

GovernanceCorporate Information

20

Contents

medium- to long-term growth, and they will further accelerate ourgrowth going forward.
In the HS business, we provide solutions that accurately
address issues on the front lines of medicine and welfare. We willcontinue to monitor the long-term trends and promote growth of
this business as a third pillar.
The Company places a similar emphasis on shareholder
returns as medium- to long-term growth investments. We aim to
maintain a consolidated dividend on equity (DOE) ratio at the 6%
level and we also give overall consideration to factors such as thestatus of cash flows and the soundness of our financial base inorder to pay stable and continuous dividends. Furthermore, in an
era where the response to sustainability issues is considered
increasingly important, we believe that non-financial aspects will
also have a significant effect in terms of increasing corporate
value. Management will also continue to strengthen its
commitment to long-term sustainability, such as linking thecompensation system for directors and executive officers withsustainability indicators.
Finally, I consider active communication with shareholders andinvestors to be another important role for the CFO.
Investor relations and shareholder relations interviews are aforum for communication where we receive various valuable
opinions from them. We will continue to reflect these opinions inmanaging our Company going forward.

Shareholder Returns
FY2020 (Actual)

Net interest-bearing
debt to EBITDA(excl. lease obligations)(times)

0.6 times

Equity ratio(excl. real estate finance)
(%)

45.6%

FY2021 (Actual)0.17 times

48.9%

FY2022 (Actual)

FY2024 (Target)

0.45 times

1.3 times or less*(2.5 times or lessduring the mediumterm plan)

50.3%

40% or more
*FY2024

Basic
policyAs our main dividend KPI, we aim for a consolidated
dividend on equity (DOE) ratio at the 6% level, and we also
give overall consideration to cash flow and maintaining asound financial base over the medium to long term inorder to pay a stable and continuous dividend.

The FY2022 year-end dividend per share was ¥63(annual dividend ¥125)
The projected dividend for FY2023 is the same at ¥125,with a DOE ratio of approximately 5%(Reference) Dividend payout ratios
FY2022: approx. 46%; FY2023: approx. 119% (estimate)

Dividends per Share
(¥)

150

125

125

100

Yearend:63

Yearend:63

50

Interim:
62

Interim:62

0

FY2022

FY2023 forecast

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

21

Sustainability Management
Basic Approach
The greatest mission of the H.U. Group, which aims to create newvalue in healthcare, is to contribute to realizing a healthy andprosperous society through business. This mission is also thefoundation of sustainability. The way to realize sustainability, in ourview, is to implement corporate activities based on the H.U. Group’s
philosophy consisting of its Mission, Vision, Values and Traits.
Furthermore, we believe that the cumulation of each activity leads tobuilding good relationships with stakeholders.
The Group has defined materiality (material issues) as an elementthat impacts the creation of medium-term corporate value andidentified materiality for promoting sustainable management. The
scope of the definition of materiality includes not only ESG
perspectives but also intangible assets in general, such as customer
assets, intellectual property, and brands. The identified materiality isreviewed and updated by the H.U. Group Sustainability Committee
every year based on progress in initiatives to address issues andchanges in the business environment. In April 2023, we determinedthat it is more important than ever to develop and grow humanresources for sustained growth, and a revision was made to add“human resource development” to materiality.

H.U. Group Materiality (Revised in April 2023)
Foundation

ESG

Item

Materiality related tobusiness growth foundation

Brand management
Intellectual property / Innovation

E

Materiality related tofoundation for businessand management

S

G

Environment

 limate changeCRecycling-oriented society

Human capital uman rights
HDiversity
Ideal workplaces

Supply chain

Sustainable procurement

BCPResilience

Communication

Relationship with all stakeholders

Governance orporate governanceCInformation security
Risk management

ComplianceAnti-corruption/Compliance

Materiality Identification Process and Update Cycle
Identification process

Phase(implementation
year)
ActorsMateriality

Update cycle(1) Identification of Issues(FY2018 and FY2020)(2) Alignment with Vision andMission (FY2021)(3) Approval of Materiality(FY2021)(4) Yearly Update(from FY2022)

Management andPresident Approval

Discussion by H.U. Group
Sustainability Committee

Approval by H.U. Group
Holdings Board of Directors

Discussion by H.U. Group
Sustainability Committee

Quality control
Customer relations

 ealth improvement
HHuman resource
development

1

3

Check
the need to
update2

Review material
topicsMateriality
UpdateCycle

Disclose information

Sustainability
Committee
discussions

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Sustainability Promotion System
With the president and Group CEO of the H.U. Group as chairman
and the Group executive officers and the presidents of the main
operating companies as members, the H.U. Group Sustainability
Committee discusses basic policy and activity plans in the area ofsustainability and monitors progress with related issues. In addition
to promoting the activities of each company, the committee has the

Medium-term Plan ProgressSpecial Featurerole of discussing and implementing measures for improvement
based on gathering and sharing information on the latest external
trends in sustainability.
Under the umbrella of the committee are a number ofsubcommittees, each covering a specific area of activity, throughwhich the officers responsible for the relevant divisions take chargeof related initiatives. The content of the committee’s discussions andresolutions is reported to the Board of Directors.

GovernanceCorporate Information

Contents

22

Changes in the Activities of
the Sustainability Committee
FY2019 stablished the Miraca Group CSR CommitteeE(currently the H.U. Group Sustainability Committee)
and started the CSR promotion system with six
subcommittees
Formulated the CSR approach and policies on theenvironment, procurement, human rights, diversity,
etc.

Promotion System
Board of Directors

FY2020President and Group CEO

H.U. Group Sustainability Committee

Approves policies and plans / monitors activities

Subcommittees

Formulate activity plans / report activity results
Environment andEnergy Subcommittee

Under the responsibility of H.U.
Group Holdings’ executive
officer in charge of generalaffairs and head of the General
Affairs Division, builds theEnvironmental Management
System (EMS) and plans andimplements environmental
activities in areas such as
climate change.

Human Capital
Subcommittee

Chairman: President and Group CEO of H.U. Group Holdings
Members: Executive officers of H.U. Group Holdings and presidents of the main
operating companies

FY2021Chairman: Relevant division head of H.U. Group Holdings
Members: Appointed by chairman, implement activity in line with policy

Under the responsibility of thehead of the Human Resources
Division, the division plays acentral role in promoting
activities linked to each policy.
Furthermore, the subcommittee
establishes and coordinates the
Health and Safety Committee
and the health and productivity
management promotion system.

Supply Chain
Management
Subcommittee

Philanthropy
Subcommittee

Under the responsibility of thehead of the Procurement
Division, the division plays acentral role in formulating andexecuting plans related tosustainable procurement.

Formulates and executes plans
related to new social contribution
activities, and local contribution
activities conducted at each site
are coordinated as needed in asystem guided by each division.

H.U. Group Holdings
Implementation of measures

Improvement of performanceGroup Companies

BCP Subcommittee

Under the responsibility of H.U.
Group Holdings’ executive
officer in charge of general affairs
and the head of the General
Affairs Division, the division playsa central role in the operation andmanagement of BCP of the Group
as a whole while coordinating withthe directors and executive
officers in charge of generalaffairs and general managers ofindividual companies.

FY2022

FY2023

 ormulated the H.U. Group’s three-year roadmap toF
CSR goals (including the first version of Long-term
Environmental Goals)
Partially revised Human Rights Policy (explicitly
added respect for international norms and principles) ormulated draft of materiality for submission to theF
Board of Directors (approved by the Board of
Directors in the same year)
Approved support for Race to Zero and Business
Ambition for 1.5℃
Revised Long-term Environmental Goals (changed
the previous goal of reducing sales-based emissions
intensity to the goal of zero total emissions by 2050)
Approved support for TCFD recommendations

 hanged names and reorganized sustainabilityC
related subcommittees
Partially revised the Training and Development Policy
Considered next sustainability roadmap

 dded materiality on human capital (added “humanA
resource development”)
Partially revised Environmental Policy and madeupward revision to Long-term Environmental Goals
Approved new sustainability roadmap(two-year targets)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Special Feature

Medium-term Plan Progress

GovernanceCorporate Information

23

Contents

Sustainability Roadmap
The H.U. Group announced key performance indicators (KPIs) and targets related to sustainability activities as the Sustainability Roadmap along with the H.U. 2025 medium-term plan announced in 2020 and has
proceeded with initiatives for three years until fiscal 2022.
In fiscal 2023, we announced a new roadmap with two-year targets through fiscal 2024 and are continuing to engage in further strengthening sustainability activities.

H.U. Group Sustainability Roadmap
FY2020-2023 (3 years)
Materiality

FY2021
ActualActualTarget

25.3% reduction

36.2% reduction

24.2% reduction

7% reduction●(Reference) CO2 emissions: Scopes 1+2

39.5 kt-CO2

41.5 kt-CO2

46.1 kt-CO2——(Reference) CO2 emissions: Scope 3

438.6 kt-CO2

456.4 kt-CO2

484.6 kt-CO2——

Waste plastic recycling rate (vs. FY2017)

Up 11.5%

Up 14.7%

Up 29.9%

Up 15%

●

73.6%

75.7%

85.7%

—

—

CO2 emission intensity (Scopes 1+2) (vs. FY2017)

Environment(Reference) Waste plastic recycling rate

Human capital

Achieved

FY2024 Target

CO2 emissions (Scopes 1+2)
(vs. FY2021)

12.6% reduction

Waste plastic recycling rate

82%
—

C

A–

A–

B or higher●

Percentage of female managers

16.8%

18.6%

20.2%

20% or more●

Percentage of female managers

22%
90%
55%

(Reference) Percentage of men taking extended leave or leave
for childcare (Japan)

34.8%

50.8%

71.4%

—

—

Percentage of men taking extended
leave or leave for childcare (Japan)(Reference) Percentage of employees who responded“Satisfied with work” in a survey of employees (Japan)

41.9%

42.9%

47.0%

—

—

Percentage of employees who
responded “Satisfied with work”
in a survey of employees (Japan)

White 500 (Health & Productivity Management Outstanding
Organizations Recognition Program) Certification—

Obtained

Obtained

Obtained●

Maintaining White 500

23.4

35.3

32.1

—

—

Average annual training hours per
regular employee*4 (Japan)

Maintained at
30 hours or more

90%

Not
achieved——

Excellent response rate (Class A)
on UNGC Self-Assessment Tool

Cumulative total FY2022–2024
75%

—

—

Meetings to exchange opinionswith suppliers

Cumulative total FY2022–2024
30 companies

Started●Cumulative total FY2020–2022
70.3%

Excellent response rate (Class A) on UNGC Self-Assessment Tool
(Reference) Class A rate (Score of 60% of total points or more)

49.2%*1

69.2%*2

85.9%*3

Cumulative total FY2020–2022
11 companies(Reference) Meetings to exchange opinions with suppliers
BCP

Start-up of the H.U. Bioness Complex(Realization of high resilience)—

Communication

Holding ESG briefing sessions

—

Held

—

Held

●

Philanthropy

Continuous promotion of and education on clinical testing

39 years

40 years

41 years (ongoing)

40 years●

GovernanceIndicators

CDP evaluation (climate change)(Reference) Training hours per regular employee (total time forgroup training, e-learning, distance education, etc.) (Japan)

Supply chain

FY2023-2024 (2 years)
FY2022

FY2020
ActualIndicators

Operation started(incrementally from January 2022)

Obtained——

Introduced non-financial indicators for compensation for
directors and executive officers—

Ended inside directors concurrently serving as members of
the Nominating Committee*1 Scope of assessment: Business partners of two overseas companies (Fujirebio Diagnostics (U.S.), Fujirebio Europe (Belgium))*2 Scope of assessment: Business partners of consolidated subsidiaries other than the six Japanese companies and two overseas companies*3 Scope of assessment: Business partners of six Japanese companies (H.U. Group Holdings, SRL, Fujirebio, Nihon Stery, Nihon Rinsho, Care’x)*4 Includes DX training

H.U. Group Holdings Integrated Report 2023

Environment and Energy

Value Creation Story

Special Feature

Medium-term Plan Progress

GovernanceCorporate Information

24

H.U. Group Long-term Environmental Goals
CO2 Emissions

Strategy and Progress

The H.U. Group has identified the areas of climate change and therecycling-oriented society as Group materiality based on the Paris
Agreement and the Osaka Blue Ocean Vision and set the long-termgoals of “net zero CO2 emissions” and “100% recycling rate ofwaste plastic” by 2050. In addition, the Group established mediumterm targets for 2025 and 2030 and formulated a Sustainability
Roadmap as KPIs in the most recent fiscal year. It also performs
progress management.
In the three-year Sustainability Roadmap started in fiscal 2020,
the fiscal 2022 targets were reached for CO2 emission intensity,
waste plastic recycling rate and CDP evaluation (climate change). In
May 2023, the original targets were revised upward for theapplication for SBT (Science Based Targets) certification*1 andreflected in the latest Sustainability Roadmap (fiscal 2023-2024). To
achieve these targets, the Environment and Energy Subcommittee
will continue to consider procurement of renewable energy, and it
will reduce energy consumption further, adjust air conditioning
settings, and introduce energy-saving equipment at each site.
Meanwhile, the waste plastic recycling rate is progressing well, andthe subcommittee will continue to select contractors capable ofrecycling and consider material recycling.
Furthermore, activities aimed at the preservation of water
resources were started as a new initiative. In fiscal 2023, we areproceeding to make preparations for the inclusion of the two themesof “protection of water resources” and “preservation of biodiversity”
in the next Sustainability Roadmap starting from fiscal 2025 with anunderstanding of water usage required at each business site, thevolume of reused water, and the water quality of and harmful
substances in discharged water.

Contents

Net Zero*2
irorm Env

Long-teWaste Plastic
Recycling

ls

l Goa
nmenta2050

100%

CO2 Emissions(vs. FY2021)

37.8% reduction
Scope 3 22.5% reduction

Scopes 1+2
CO2 Emissions(vs. FY2021)
Scopes 1+2

Waste Plastic
Recycling

16.8% reduction

CO2 Emissions

90%

Scope 32030

10.0% reduction

Scopes 1+2

41.5 kt-CO

2

Climate ChangeCountermeasures
CO2 reduction

Scope 3456.4 kt-CO

2

Increase of emissions
due to operational start of
H.U. Bioness Complex

Waste Plastic
Recycling

85%

Waste Plastic
Recycling76%*1 Greenhouse gas emission reduction targets for companies with a scientific basis
consistent with the standards required by the Paris Agreement

Marine Plastic Waste
Circular, effective use of resources

See the Group website for details.
WEB

Environment and Energy
https://www.hugp.com/en/sustainable/environment.html*2 Scopes 1+2

2025

FY2021 Performance(baseline year for CO2 reduction)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Human Capital
Strategy and Progress

Note: See “Special Feature: The H.U. Group’s Human Resource Strategy” on page
28 for details on our human resource strategy

Health and Productivity Management

The H.U. Group is implementing various measures for the physicaland mental health of not only employees but also their families basedon the Health Declaration issued in 2019. In 2022 and 2023, four H.U.
Group companies (H.U. Group Holdings, SRL, Fujirebio, and H.U.
Frontier) were certified in the White 500 Health and Productivity
Management Outstanding Organizations for two consecutive years. In
April 2023, the Healthcare Management Promotion Department was
put directly under the control of the CEO, and with the participation ofmanagement of operating companies, we clarified indicators
promoting health and productivity management and updated ourstrategic map. We also participate in the Health & Productivity
Management Alliance and work with other members to realize longer
healthy lifespans and create new corporate value.

Health and Productivity Management
Promotion System
Health and Productivity
Management
Promotion Council

H.U. Group Holdings
Health and Productivity
Management Officer
President and Group CEO
Reporting and deliberation
Healthcare Management
Promotion Department

Collaboration*1

The H.U. Group perceives human resources as “capital” based on
the personnel philosophy that “the power of the Company is thesum total of the power of its individual members,” and we areworking to maximize their value by enhancing their capabilities
through improving skills and knowledge.
The Group has established a system in which the Human
Resources Division of the holding company handles the humanresource functions of principal operating companies, and it
promotes unified human resource management throughout theGroup in accordance with the management strategy. In fiscal 2022,
the Human Capital Subcommittee, comprised of members of the
Human Resources Division, was established to maximize the valueof human capital and is endeavoring to implement human capitalmanagement in coordination with the Sustainability Committee andthe Central Health and Safety Committee. At present, we areengaged in fundamental reform of the human resources system torespond to changes in the social environment and globalization ofbusiness, and preparations are being made to commence operationfrom fiscal 2024.
Under this new human resources system, our goals are “selffulfillment through work” and “a company where they can truly enjoy
working,” and we will establish mechanisms for appropriately
evaluating employees’ efforts and results in achieving their goals.
Specifically, this will revolve around revising the grading system, theevaluation system, and the compensation system and establishinginstitutional frameworks.
The new grading system will subdivide grades to clarify career
paths and promote growth by setting appropriate roles and growth
steps. A specialist career-path system will also be established toenable the formation of a career with promotions even when being
specialist-oriented. The evaluation system will clarify the roles andexpected behavior of each person. Also, the compensation system
will have redesigned wage models such as variation of bonuses toencourage employees to embrace the challenge presented bygreater responsibilities.
An engagement survey is scheduled to be conducted in
December 2023, and we will work to resolve organizational andother issues through the visualization of engagement.

Special Feature

Medium-term Plan Progress

Person Responsible for
Health and Productivity
Management Promotion
General Manager of Healthcare
Management Promotion Department

The general managerof the Healthcare
Discussion
Management
andPromotion Department
coordination
assigns members from
H.U. Group Holdings’
human resources,
Roll-out of general affairs andmeasures sustainability divisions,the health insurance
association, the labor
union, etc.

Group companies
Healthcarerelatedcompaniesof the Group- Health and Safety
Committee- Health Management
Center- Industrial physicians- Workplaces

Implementation - Employees
and theirand promotion
families- Otherstakeholders*1 Maintain and promote the health of employees and their families by quickly rolling out
and utilizing cutting-edge healthcare-related products and services within the Group

Human Resource Development

We are developing human resources by expanding grade-specifictraining and specialized training for each position and raising the overall

GovernanceCorporate Information

Contents

25

capabilities of employees through an integrated learning management
system and the H.U. Skill Map. In addition, the second year of H.U.
Business College launched in 2022 has begun. Furthermore, fromfiscal 2023, we are strengthening the capabilities and skills of each
employee and supporting career development based on self-reliance,
self-direction, and self-responsibility that we aim for through the
expansion of new training programs, such as manager training for the
purpose of strengthening management and DX training for the purposeof further enhancing the digital literacy of employees.

Diversity

The Diversity Promotion Section, newly established in October 2022,
is creating workplaces where diverse human resources can workand thrive while exchanging opinions with management on the ideal
form of diversity and priority measures. Initiatives in fiscal 2022
included holding basic lectures on diversity and workshops on
LGBTQ for human resource personnel and participating in the
Dialogue in the Dark Training Program*2. In fiscal 2023, we plan topromote this throughout the Group and will revise internal
regulations and internal procedures from a diversity perspective, in
addition to providing diversity training for all employees.
*2 S ocial entertainment in which participants enjoy communication and various
experiences using senses other than sight in “100% pure darkness” where light iscompletely shut off, with the guidance of a visually impaired person (https://did.
dialogue.or.jp/totonou/en/)Workplace Environment

We used the relocation of the head office in May 2023 as anopportunity to make the transition to a hybrid work style leveraging
the strengths of teleworking and on-site work, and we implemented
a free dress code with respect for the values and sensitivity of
individual employees. The objective is to foster an open andaccepting organizational culture. Going forward, we will promote
unity of the Group and form a new culture while establishing anenvironment that leads to the improvement of work styles andoperational efficiency.

See the Group website for details.
WEB

Human Capital Website (in Japanese)
https://www.hugp.com/humancapital/

WEB

Human Capital Subcommittee
https://www.hugp.com/en/sustainable/humanrights.html

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Supply Chain Management
Strategy and ProgressWithin the H.U. Group, the Supply Chain Management
Subcommittee builds systems for handling the procurement
functions of operating companies and formulates and executes
plans for fair, stable, and sustainable procurement.
When initiating a business relationship, we ensure a sharedunderstanding by communicating to the new partner theProcurement Policy and the Basic Policy on Business Partner
Selection. Furthermore, we conduct due diligence on existing
business partners approximately once every three years. Specifically,
we utilize the United Nations Global Compact Self-Assessment Tool
(UNGC SA) to check a wide range of items covering the compact’s
10 principles in four areas (human rights, labor, environment, andanti-corruption) in an investigation that covers primary business
partners and business partners accounting for 80% of the annual
order amount of each Group company.
Supplier assessment is implemented collectively by theProcurement Division of the holding company on a cycle of once
every three years. Assessments of companies’ business partners
were conducted for six Japanese companies (H.U. Group Holdings,
SRL, Nihon Rinsho, Fujirebio, Nihon Stery, and Care’x) in the firstyear, two overseas supply chain management companies (Fujirebio
Diagnostics and Fujirebio Europe) in the second year, andMedium-term Plan ProgressSpecial Feature

Governanceconsolidated subsidiaries, etc. other than those covered in the firstand second years in the third year. Therefore, the Sustainability
Roadmap sets three-year cumulative totals as targets. These areclassified based on the UNGC SA score with the aim of improving theexcellent response rate (Class A). Although the three-year cumulative
results for fiscal 2020 to fiscal 2022 were below targets, in thesecond assessment of six Japanese subsidiaries conducted in fiscal
2022, the percentage of Class A improved by 1.6 points comparedto fiscal 2019 (first assessment), which covered the same companies.

Future Outlook

Meetings are conducted to exchange opinions with business
partners that have high-risk items in their supplier assessment
responses. From fiscal 2023, we have adopted a Q&A format with aview to assessments from the next fiscal year by focusing on theenvironment and human rights to which stakeholders are paying
particular attention. Good examples from Class A suppliers areshared with Class B and C suppliers with the aim of raising theoverall level.
In the future, we plan to introduce systems utilizing AI, implement
digital transformation of BCP, and visualize supply chain risk. We willbuild a system enabling immediate awareness of the situation if a
disaster occurs for some reason so that the initial response can betaken rapidly. By implementing these measures, we believe we will
be able to minimize management risk.

Corporate Information

26

Contents

Progress in Supplier Assessments of
Six Japanese Companies*1

(%)

FY2019 Results(First Assessment)

FY2022 Results(Second Assessment)

Questionnaire collection rate

100

100

Class A rate (Score of 60%
of total points or more)

84.3

85.9

Class B rate (Score of
40–60% of total points)

12.3

11.8

Class C rate (Score of 40%
of total points or less)

3.4

2.4

Share of non-responses

0

0

*1 S
 cope of assessment: H.U. Group Holdings, SRL, Nihon Rinsho, Fujirebio, Nihon
Stery, Care’x
See the Group website for details.
WEB

Supply Chain Management
https://www.hugp.com/en/sustainable/procurement.html

Status of Supplier Assessment in the Past Three Years*2 (Including Human Rights Due Diligence)
Average Scores by Item for Suppliers(%)

Distribution of Assessment Scores of Suppliers (Number of Companies by Assessment Item and by Class)Corporate governanceCoexistence withlocal communities
Supply chain

100

70

60

74

40
20

87

74

Labor

76

88
Information security

94
Quality and safety

Corporate
governance

Human rights

Labor

Environment

Fair businesspractices

Quality andsafetyInformation
security

Supply chain

Coexistencewith local
communities

A

121

100

130

105

118

131

130

109

102

B

16

41

8

21

17

7

9

10

20

C

35

31

34

46

37

34

33

53

50

Total

172

172

172

172

172

172

172

172

172

Human rights

83 80

83

Environment

Fair business practices*2 Three years of FY2020 (covering two overseas companies), FY2021 (covering other consolidated subsidiaries, etc. other than six Japanese companies and two overseas
companies), and FY2022 (covering six Japanese companies; second assessment)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

SpecialFeatureAiming to Becomea Healthcare Innovator—
Reforming the H.U. Group
28 Special Feature: The H.U. Group’s Human
Resource Strategy
31 Strengthening Our Innovation Foundation

Reforming to Become an Innovator
34 LTS Business38 IVD Business
42 HS BusinessMedium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents27

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

28

Special Feature: The H.U. Group’s Human Resource Strategy
The Second Founding andReforming the Organizational Culture
The H.U. Group considers 2017 to be the year of its “second
founding.” The management situation at the time was focused on
short-term profit, with insufficient investments for the future and a
deceleration in growth. Moreover, while our operating companies
were industry leaders, they had only limited internal transactions,and Group synergies were not being fully realized.
To overcome mounting management issues and maximize theGroup’s growth potential, we started a series of bold structuralreforms under the leadership of CEO Takeuchi, who had been
appointed Director, President and Group CEO a year earlier, in2016. We needed to radically reform the mindset of each
employee in order to transform the Company’s businessstructure, align the entire Group to a common vector, andestablish a foundation for sustainable growth. The first step in thisprocess was to hold workshops for mainly younger employees at
each operating company to consider what the essential characterof their company is. The opinions elicited from these workshops
were used to formulate a new philosophy system. Next, we held
workshops for employees across the Group at locations
throughout Japan, along with explanation sessions at subsidiaries

and regional offices. By providing opportunities for direct dialogue
between top management and employees and communication
between Group employees, we gradually promoted reforms inworkplace mindset.
In 2016, we embarked on an initiative to unify the existing
personnel evaluation systems throughout the Group,
standardizing those previously designed and operated by each
operating company. This system revision resulted in everyone
sharing a common personnel evaluation and salary system, withthe aim of promoting the flow of human resources within theGroup and accelerating their growth. In addition, to promoteincreased transparency and speed in the decision-making
process from a system perspective, we also took steps to unify
the decision-making authority and internal rules for each level. In
other initiatives, management divisions such as general affairs,
human resources, accounting, and legal affairs wereconcentrated inside the holding company, along with purchasing
functions, in an effort to enhance service levels and cut costs
across the entire Group. At the same time, we invested in future
growth without hesitation.
Through this process, we formulated our new philosophy
system and made a series of system reforms, aiming to implement
rapid top-down decision-making by the CEO, while fostering anorganizational culture that encourages bottom-up decision-making
through authority distribution. The background to this was theCEO’s conviction that frontline employees are the ones with the
deepest understanding of the frontline situation and that they areable to sense signs of change in the operating environment fastest.
In 2020, about three years after starting our unprecedented
and dynamic reforms, the results emerged in an unexpected
form. In January of that year, Japan confirmed its first COVID-19
case. This gave rise to the need to construct a system for people
to be tested and execute test reagent development immediately.
We responded by rapidly sharing the genetic information andnecessary virus testing methods within the Group while
promoting development and verification. In May 2020, we
became the first in Japan to launch a rapid antigen test kit foreasier infection detection than a PCR test. The performance ofthe test kit developed by Group company Fujirebio was quickly
verified using SRL’s expertise, which enabled rapid
commercialization. Employees familiar with the previous state of
the Group reflected that this kind of coordination between Group
companies would have been unthinkable before. This experience
became a case study showing our ability to create anenvironment where Group companies enhance each other byleveraging their strengths.

Changes in Human Resource Strategy to Promote Group Integration
FY2017–FY2019 Shift in emphasis from individual optimization to overall optimization/Building of Group synergies/Establishment of new growth strategy
 tart of medium-term plan Transform! 2020
SStart of Group integration strategy, positioned as a second
founding, to strengthen growth foundation
Review of corporate philosophy, formulation anddissemination of Group message

Management
strategy
FY2017

Human
resource
strategy

Key initiatives for second foundation and a new decade

FY2018Integration of Group Values and Traits
Rebuilding of training system
Integration of personnel systems

Main initiatives

1. Strengthen existing business
2. Strengthen R&D
3. Strengthen overseas strategy
4. Promote alliance strategy

FY2019 ull-scale initiatives for work style reforms aimed atFrealizing work-life synergy by creating a healthy andhighly productive work environment

 tart of construction of the H.U. Bioness Complex
SEstablishment of Miraca Research Institute G.K.
(currently H.U. Group Research Institute G.K.）
Establishment of joint venture with
Ping An Insurance (Group) Company of China

 evision of retirement bonus and pension plan
R
Revision of employment regulations to improve productivity

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Management Structure Realized by Establishinga Foundation of Human Capital
In April 2020, Miraca Holdings, SRL, and Fujirebio nearlycompleted the integration of their human resource systems,
internal regulations, and decision-making authority, establishing acommon foundation for human resource allocation and personnel
management. In July of the same year, we indicated our future
direction both internally and externally with a new company
name, “H.U. Group Holdings,” which suitably embodies ourmanagement policy of expanding our business into healthcare,along with our redefined Mission and Vision.
In October 2020, H.U. Frontier was established by integrating
the sales and marketing functions of each operating company.
The new company is an outcome of the Group integration strategy
initiated in 2017. Establishing a foundation for human resources
enabled the building of a one-stop services system connecting theentire value chain. In 2021, the Company clarified the roles ofsegment executive officers to enable its transition to a new growthstage. In 2023, we revised the compensation system for directors
and executive officers to promote global management.
The Group’s human resources philosophy centers on theidea that the power of the Company is the sum total of theMedium-term Plan ProgressSpecial Feature

power of its individual members. Our corporate management
practice focuses on people through hiring and personnel
strategies that aim to maximize the capabilities of each
employee. In hiring new graduates, we are strengthening ourrecruiting activities with an emphasis on “global, R&D, anddigital” talent to support the Group’s future growth. Furthermore,in our personnel strategies, in 2023 we started running an
in-house career change system called AdCareer. The systemcomprises a free agent system and in-house recruitment. It will
provide various opportunities for career development within theGroup to the employees at each company.
In the post-COVID-19 industrial world, worker mindsets andvalues have changed significantly, with a greater emphasis on
work-life balance and the popularization of the concepts of wellbeing, diversity, and inclusion. The Group’s personnel system had
been in operation for approximately five years, but it wasincreasingly misaligned with the Company’s management policy
following its name change and its shift towards a global
development-focused business strategy. Given this background,
we decided to fully launch a new personnel system throughout
the entire Group from fiscal 2024.
Under the new personnel system, we will practice humancapital management by treating employees’ skills, abilities, andGovernanceCorporate Information

Contents

knowledge as “capital,” aiming to maximize their value. At thesame time, we have positioned this as a core strategy forachieving significant growth in the upcoming medium-term plan,
starting in fiscal 2025.
The three pillars of the new personnel system are the grading
system, the evaluation system, and the compensation system.
The key point for revision of the grading system is a greater levelof detail. This involves an increase in the number of grade levels
to enable a fair evaluation reflecting the size of the role played bymanagers. Moreover, by setting appropriate roles and growth
steps, we will build systems to encourage the growth of eachindividual. In addition, we have established new specialized
career paths aimed at furthering the careers of specialists. For theevaluation system, we will clarify the target levels that individuals
need to achieve and their expected roles based on the common
platform for personnel management that has been phased insince 2017. With regard to the compensation system, we will
redesign the wage model, including strengthening thedifferentiation of bonuses according to evaluation and salary
increase upon promotion.
The concept of the new personnel system is a fair system that
promotes employees’ self-reliance, self-direction, and selfresponsibility, and it enhances individual capabilities. The abilities

FY2020–FY2022 Addressing the challenge of “Healthcare for You”/Construction of foundation for Group coordination/Spread of COVID-19’s impact
 tart of medium-term plan H.U. 2025—Hiyaku (Significant Growth) & UnitedSChange of company name to H.U. Group Holdings, revision of Mission and Vision
H.U. Frontier established as an integrated sales company for the three core
Group companies
Provision and expansion of various testing products and services related to COVID-19
FY2020 evision of segments, shift to a three-business structure ofR
LTS, IVD, and HS businesses
Establishment of MEDISKET, a logistics joint venture with
MEDIPAL HOLDINGS
Pivot to a global strategy for the CDMO business
FY2021

 evision of personnel systems, mainly welfare system andRwork style reforms

 evision and formulation of personnel-related regulations,R
including H.U. Frontier, to build the optimal management
system for achieving the medium-term plan29

 ull operation of the H.U. Bioness Complex
FADx NeuroSciences N.V. becomes a consolidated subsidiaryFluxus, Inc. becomes a consolidated subsidiary

FY2022
onward ormulation of a new personnel system to be fullyFlaunched from FY2024
Revision of compensation system for directors andexecutive officers

H.U. Group Holdings Integrated Report 2023

Value Creation Storyof the individuals alone cannot realize the H.U. Group’s Mission
and Vision. Therefore, to realize them as an organization and ateam, we intend to transform into a professional group thatmerges each individual’s high aspirations and expertise. To thisend, it is essential to have a fair personnel system that promotes
employees’ self-reliance, self-direction, and self-responsibility andenhances their individual capabilities. Furthermore, from apersonnel strategy perspective, we have defined our ideal
direction as aiming to empower each employee to achieve selffulfillment through work and create a company where they cantruly enjoy working.

New Personnel System Reform Concept
A fair personnel system that promotes employees’
self-reliance, self-direction, and self-responsibility
and enhances their individual capabilities
Further strengthening of management capabilities
Prioritization andpromotion of humanresources who take on thechallenge of transformation

Detailed presentationof expected standards
and pathways

Medium-term Plan ProgressSpecial Feature

Support for Career Development Based on
Self-reliance, Self-direction, and Self-responsibility
Based on our human resource development policy of “careerdevelopment based on self-reliance, self-direction, and selfresponsibility,” the Group emphasizes career development andability development, offering each employee opportunities for
growth and learning.

Employee Career Development

Within the H.U. Group, employees establish their own
performance targets at the start of the year, as well as a careergoal and an ability development plan, and strive to realize themthroughout the year. Moreover, to help employees to realize theirtargets, goals, and plans and to support their proactive careerdevelopment, we provide regular opportunities to discuss them,including evaluation interviews and one-on-one meetings with
their supervisors. Furthermore, we develop and provide learning
programs to help each employee learn how to think about careerdevelopment and how to build their own careers with the aim of
fostering their career awareness.

Learning Management Systems
Redefinition ofmanagement’s role
Self-relianceSelf-direction
Self-responsibility

Appropriate evaluation,
promotion anddemotionTransformation of personal awareness and behavior

Please see the following websites for further details.
WEB

Human Resource Development (in Japanese)
https://www.hugp.com/humancapital/efforts/hrd.html

WEB

Human Capital
https://www.hugp.com/en/sustainable/humanrights.html

To encourage employees’ proactive learning, we have establishedan environment for individual growth and career development,
including our CAREERSHIP (Learning Management System)
education platform to enable people to learn anytime, anywhere;
the H.U. Skill Map, which visualizes the Group’s required skills;
and specialist education programs tailored to specific job types.

Human Resource Development throughH.U. Business College

In January 2022, the Group launched H.U. Business College, its
first open-application education program. Our objective is to
discover and develop autonomous and proactive humanresources seeking opportunities for their own growth. Students
engage in self-directed learning, covering business fundamentals,
such as logical thinking, marketing, finance and accounting,management strategy, and corporate legal affairs throughweekday evening classes and e-learning. The college functions
as a space where the H.U. Group’s various human resources canGovernanceCorporate Information

Contents

30

realize their envisaged future careers by gathering and learningfrom other participants, developing a higher perspective, andexpanding their knowledge.

List of Main Initiatives
H.U. Skill Map and Specialist Education Program

To support employee growth, we have organized the H.U. Skill Map,
visualizing job-specific skills, and specialist education programs thatdetail specialist knowledge, skills, and qualifications for each position.
These initiatives support individual career development and encourage
employee growth.

CAREERSHIP (Learning Management System)
Education Platform

We have established a learning environment with over 160 courses, inaddition to company- and organization-specific education programs,
such as required education and level-specific education, allowing all
employees to learn anytime, anywhere.

H.U. Business College

The H.U. Group’s first open-application education program started in
January 2022. Participants with a proactive learning mindset acquire
fundamental business knowledge from experienced businessprofessionals over the year.

Promotion of DX Education

In fiscal 2023, we will provide DX education to strengthen digital
literacy and work to develop specialist human resources withadvanced digital skills for creating innovation.

AdCareer In-house Career Change System

This system, introduced in fiscal 2023, offers employees opportunities todevelop various careers within the Group as an in-house career changesystem comprising a free agent system and internal recruitment.
Through this system we provide each employee with opportunities toproactively find their own career direction and take on challenges.

Human Capital Website

The Group launched the website in June
2023 as a platform for disseminatingexternally the entire Group’s personnel
philosophy, personnel initiatives, andother activities.
WEB

Human Capital Website (in Japanese)
https://www.hugp.com/humancapital/

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan Progress

GovernanceSpecial Feature

Corporate Information

31

Contents

Strengthening Our Innovation Foundation
Corporate R&D
The H.U. Group Research Institute (HRI) provides the corporate R&D
function separately from the H.U. Group operating companies’ R&D
divisions. It provides basic research that continuously generates
future business seeds. HRI collaborates with corporations andresearch institutes in and outside the Group, covering all stages from
exploration of research themes to real-world application, which is theexit from R&D.
As the Group’s central R&D organization, HRI is currently focusing
on the following three points. The first is creation of innovation. We
are promoting research activities with a focus on “value” that
contributes to solutions for market needs and social issues in the
medical and healthcare domain. For this reason, at the initial stage of
research, we focus on the ideas of the individual researcher andrecommend conducting a rapid proof of concept (PoC).
Subsequently, as the research advances to higher stages, it isassessed comprehensively from various perspectives, including thelevel of value it can provide and problems it will solve, its technicalexcellence (the presence of a No. 1 or “only one” factor), and its
investment profitability.
The second focus point is research activities that will strengthen
existing businesses. By merging advanced technologies such as AI
and IoT with our existing businesses, we aim to create new

H.U. Group Research Institute’s Assets andCore Technologies
Technology platforms andexpert human resources base
Analysis technology and wet lab

Technology
and systems

Informatics
and AI

Case Study Preparation against New Threats
Rapid Development of Virus Genome Analysis System and Infrastructure Preparation for the Next Generation

Regular virus genome screening is considered important for dealing
with infectious diseases caused by viruses such as COVID-19
because mutations occur in the genome information that determines
the characteristics of the virus, and sometimes, these causechanges in the characteristics of the virus. The H.U. Group rapidly
established a virus genome analysis system and analyzed a large
volume of virus genomes over approximately three years. Genome
analysis data grows to a huge volume during a pandemic, and it istherefore important to prepare data analysis infrastructure to ensurestable continuity of analysis. The Group has developed a

Building a
Technology
Platform forLarge-scale
Genome Analysis

SpecimensRNA
extraction

Reversetranscription

cloud-based genome analysis platform as a new analysis
infrastructure. The platform will enable large-volume, stable genome
analysis. Genome analysis is not limited to COVID-19. Its rapidly
expanding applications include analysis of other infectious diseases,
identification of genes that cause cancer and hereditary diseases,
and analysis of bacterial flora. Our previous analysis system faced
limitations in certain cases due to insufficient processing power.
Having developed and implemented a cloud-based analysis
infrastructure, we are well-equipped to further promote theCompany’s statement, “Healthcare for You.”

Library
preparation

SequenceData
analysis

ReportAdopting cloud technology to build infrastructure
capable of flexibly responding to infection situations

Case Study Challenge for a New Healthcare
Nobeoka City Postal Testing Project

Health check-ups are considered effective for maintaining one’s
health, but a certain number of people do not receive them. To
address this issue, in 2021, the H.U. Group received an order from
Nobeoka City, Miyazaki Prefecture to survey the health risk of people
who had not received health check-ups (around 7,000 people).
Through the project, 476 people conducted self-testing using postal
testing kits provided by the Company, and 332 people received ahealth check-up at a clinic, which enabled us to identify a number ofpeople requiring immediate diabetes treatment. Data analysis
revealed that the risk of diabetes among people not receiving ahealth check-up was 3.8 times higher than people receiving acheck-up, demonstrating that appropriate use of testing and earlyintervention can dramatically reduce total medical costs. The H.U.
Group is pursuing new modes of healthcare that are not bound by
existing testing and medical care frameworks, and we aim to
implement these in society.

Early Intervention
Using Postal
Testing andVerification of Its
Effectiveness
Guidance

Needle prick

Blood sampling

Send by post

Testing

Recommendation for health check-up

Dispatch of
testing
guidance

Draw bloodby pricking witha lancetTake around five
drops of blood

Daily postingof samples

Test for 14 lifestyledisease risk items

Depending on the test results, Nobeoka City
public health nurses recommend clinic
check-ups by making individual visits

H.U. Group Holdings Integrated Report 2023

Value Creation Storycustomer experiences and, moreover, new emotionally moving
experiences. Meanwhile, new business models that are outside thetrajectory of existing businesses and projects involving theimplementation of solutions are positioned as “internal venture”
projects to be managed by HRI, which promotes the effective
utilization of the technologies and expertise of each operatingcompany. Recently, we have provided solutions that go beyond
conventional R&D functions, such as developing large-scale
screening test infrastructure for airport quarantine and large-scaleinternational events, which were used as border control measures
for COVID-19.
The third point is developing the next generation of humanresources. In addition to developing highly skilled technical humanresources, we are also working on developing diverse humanresources who will play key roles in the Group’s growth, including
project managers to lead commercialization projects and project
leaders who can effectively coordinate cross-functional groups oftechnicians. In particular, creating innovation requires essential
human resources who can envisage new value inspired by market
needs based on wide-ranging expertise in medicine and healthcaretechnologies. Furthermore, HRI serves as a facilitator for enhancing
the overall technology literacy of the entire H.U. Group, which
contributes to medium- to long-term growth.

Composition of R&D Expenses (FY2022)(¥ million)

LTS

Genome analysis infrastructureand development of new
items, etc.

Corporate

Platform technology, newmodalities, AI, DX, etc.

GovernanceSpecial FeatureIntellectual Property Activities

1,441
(15%)

(9%)

The H.U. Group regards intellectual property as a main pillar of its
business. We have constructed a system in which the holding
company centrally manages intellectual property created by Group
companies in Japan and overseas. By appropriately protecting theintellectual property of each operating company, we not only minimize
the related risks but also strive to maximize the value of intellectual
property by using it and combining it within the Group. Additionally,
we periodically hold meetings on intellectual property strategy toreview our intellectual property portfolio. We use an IP landscape*1 toanalyze the intellectual property of the Group and other companies
and work to share information with each business division.
Recently, we have supported the expansion and enhancement of
individual businesses by using intellectual property as a catalyst to
invigorate alliances with partner companies, medical institutions, andacademia, among others. For example, the Group’s ownership ofpatents and technologies related to exosomes (EVs)*2 andimmunoassays has led to a steady increase in open innovation and
CDMO businesses.
The Group acquires patent rights as well as trademark rights for
its original technologies to promote their branding. For example, wehold trademark rights for iTACT® in relation to immunoassay sample
preprocessing technology and EViSTEP® in relation to exosome(EV)-related platform technologies. This protects the Group’s
technologies in terms of both patent rights and trademark rights.
*1 A method used for analyzing the intellectual property information of the Company
and competitors as well as the market and using the results for formulating
management strategies and decision-making*2 One of the extracellular vesicles (EVs) excreted from cells. Including messengers
such as proteins and mRNA

Composition of Patent Portfolio

As of April 1, 2023

(%)

R&D
expenses

9,556
7,294
(76%)

Reagent
for testing
Number ofpatents held

609

Utilization of healthcare
information, AI, and IoT

45%Corporate Information

Contents

32

IT Platform Supporting Management

821

IVD

Content development,ultra-high-sensitivity
platform, etc.

Medium-term Plan Progress

24%

Platform for testing

Others

14% 7% 10%
Next-generation
healthcare

H.U. Digital Vision
To realize reforms for better medical care services,
we will maximize the potential of digital technology and ICT
to create new value in the healthcare business

Basic Strategy(1) Lean operation aiming for
streamlining and increased
efficiency(2) Using digital technology tocreate value that closelyaligns with individuals(3) Building a human resource base and technology innovation
platform for providing new digital healthcare

The Group has formulated a Digital Vision for a managementtransformation to realize its Mission and Vision. We will promote digitaltransformation (DX) along two axes. The first is a lean operation*3 withgreater sophistication and efficiency of operational processes andreduced costs. The second is the creation of a new digital healthcare
business based on digital technology and data. In addition, we arebuilding a technology innovation platform for providing new digital
healthcare, including the appointment and development of ICT and
DX human resources and the preparation of infrastructure.
In recognition of these initiatives to transform management using
digital technology, the Company was selected as a DX Stock*4 in
May 2023.
*3 C ontinuously improving operations to increase the productivity of a corporate
organization*4 C ompanies listed on the Tokyo Stock Exchange that have been jointly selected
and announced by the Ministry of Economy, Trade and Industry, the Tokyo Stock
Exchange, and the Information-technology Promotion Agency, Japan for theirperformance in building internal systems to promote DX in a way that enhances
their corporate value and for their outstanding utilization of digital technologies

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan Progress

GovernanceSpecial Feature

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Contents

33

DX Strategy Explanation by the CIO
Aiming to build a technology innovation platform forcarrying out business reform to realize our Mission
and Vision
The H.U. Group has positioned DX as a means for opening up
new possibilities in healthcare and accelerating business reform.
We aim to build a technology innovation platform capable ofproviding optimal healthcare for everyone. At the heart of thisproject will be Japan’s largest clinical testing platform. We havestarted a project to establish this platform by deploying the IT
system built for the H.U. Bioness Complex to all our laboratories
throughout Japan. Inside our testing labs, which process morethan a hundred thousand samples daily, we use RFID technology
to manage traceability at every step, from collection andreception to testing, reporting, and disposal. Using these data,
we aim to visualize the status of testing progress and theprocessing capacity of each testing machine, with the goal ofenhancing the reliability and efficiency of testing. In the IVD
business, we are implementing manufacturing reforms by
optimizing the manufacture and supply of testing machines andreagents in line with domestic and overseas demand as part ofefforts to further enhance our supply chain infrastructure.
In creating value, we strive to accelerate the speed of highvolume data processing in the genome analysis business, and toenhance AI image diagnosis accuracy. In our healthcare service
business for individuals, we have linked the personal healthrecord (PHR) provided by Group company Ishinban, Inc. to
Mynaportal*1. We plan to offer new services such as

pharmaceutical logbook functions during fiscal 2023. In July
2023, we established a subsidiary to engage in the point of caretesting (POCT) business for individuals and launched services. In
the future, we will coordinate with pharmacies and other partners
to link PHR and POCT data to provide high-value-added
healthcare services based on test results.
*1 A
 government-operated administrative service platform that was opened inconjunction with the launch of the My Number system

Focusing on the development of DX human resources
who can support business reform and the building ofa next-generation healthcare platform
What is important as we advance these initiatives is thedevelopment of human resources who can leverage digitaltechnology to transform business and create value. The H.U.
Group has defined the DX human resource development targets
as DX human resources for horizontal integration,*2 DX humanresources for data utilization, and DX human resources forbusiness reform.*3 We have built DX education programs for all
employees and will begin implementing them in fiscal 2023.
Through DX human resource development, we aim to actively
contribute to the creation of an organization where employees
can shift to roles that add higher value.
*2 H uman resources capable of coordinating and reforming businesses andoperations from a Group-wide perspective*3 H uman resources capable of taking a strategic view of business and technology
trends and making decisions aligned with future business development

Toshihiko Shimizu
Executive Officer and CIO

The H.U.
Group’s
Digital
Education
System

H.U. Digital Vision and Education Program for Human Resources Who Will Promote DX

Specialist
Education

Basic
Education

DX Human Resources for
Business Reform

Entrepreneurship

Experience Outside
the Company

DX HumanStrengthen Hypothesis Management
Resources for Technology
ReformTesting
Data Utilization

DX Human Resources for Strengthen Project Management Project Work Styleand Planning Abilities
Formation Reforms
Horizontal Integration
DX Foundation Human Resources(All Employees)

Awareness
ReformKnowledge
Acquisition

Business
ReformPoC

Assessment

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Reforming to Become an Innovator:
LTS Business

LTS

Medium-term Plan ProgressSpecial Feature

Governance

23.4%

First
position*2

Share of the Japanesecommissioned clinicaltesting market

Business Scale

Testing business(including CRO
functions)

Main Companies

80%or moreFirst
position*3

34

Major hospitals
are our clients70%or moreShare of thechromosome
testing market

Over

Over

Over

Number of commissioned
tests per day

Annual number oftests conducted

Number of sites in Japan

200,000

Main Products and Services

Contents

Lab Testing and its related Services BusinessBusiness Strengths
First
position*1

Corporate Information

400 million

120

H.U. Bioness Complex• SRL, Inc.
• Nihon Rinsho, Inc.
• HOKUSHIN Clinical Laboratory, Inc.
etc.

Health check-up
support business

Food, environment,
cosmetics testing
business

The H.U. Group’s core facility, with one of the world’s largest clinical testing laboratories. General testing is processedin large volumes thanks to full automation and 24-hour operation, and in esoteric testing, the facility handles
advanced test items.
*1 Yano Research Institute “2023 Clinical Laboratory Center Management Overview”*2 Hospitals with 500 or more beds
*3 Research by H.U. Group Holdings

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan Progress

GovernanceSpecial Feature

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35

Strategy Explanation by the Executive Officer in Charge of the LTS BusinessWe aim to establish an unrivaled position in the clinical testing market through full operation of the H.U. BionessComplex. We will strive to grow our base business and to expand testing fields that support advanced medicine,
as well as prioritizing efforts to improve profitability and strengthen our business structure. At the same time, wewill create new value and generate innovation as we continue our challenge of building a foundation for the next
phase of society and medical care.
We aim to establish an unrivaled position while refining
our strengths as the market leader in Japan, with afocus on delivering unique value within the GroupThe H.U. Group’s business is centered on products and services
that support the core fields of medical institutions, such as
diagnostics, treatment, and surgery. Our strength comes frompossessing a customer base across a wide-ranging value chain.
The LTS business, which I oversee, provides essential clinicaltesting and related services for patient diagnosis and treatment
within our value chain. Our social responsibility in the LTS
business is to improve individual patient health and enhanceoverall medical care through accurate, high-quality testing
services. The key player in this segment is SRL. SRL has the top
share of the Japanese commissioned clinical testing market.

We have recognized the following three points as the main
reasons why customers prefer SRL’s testing services. The first is
the extensive coverage of a wide range of test items that SRL canundertake. SRL offers a comprehensive range of services, fromscreening centered on the primary care field, such ascomprehensive examinations, general health check-ups and initialdiagnoses, to advanced esoteric testing needed at the treatment
stage. In addition, SRL has had strengths in esoteric testing since
its establishment in 1970 and has expanded its business over theyears mainly in university hospitals and national hospitals. At the
H.U. Bioness Complex, we leverage the benefits of scale throughmass transport centered on esoteric testing specimens shippedfrom all over Japan. We are also expanding testing to support
advanced medicine, such as genome medicine in the fields ofcancer and rare diseases.

Net Sales and Operating Profit of the LTS Business

Main Strategies and Initiatives Going Forward(¥ billion)

Makoto Matsumoto

200.0

Executive Officer in Charge of LTS

150.0

179.9
120.2

100.0

163.1

140.9

40.0

156.0

30.0

23.6

4.2

0

2019

Net sales (left axis)

10.0

0.3
2020

Medium-term Plan Targets and Performance for LTS Business

20.0

12.6

50.0

 ealize the effects of the H.U. Bioness Complex
R
Radically reform the structure of fixed costsImprove profitability

2021

2022

Operating profit (right axis)

2023(Forecast)

(FY)

0

FY2024 target

FY2022 performance

Net sales CAGR

6% or more*

10.7%

EBITDA margin

17% or more

7.5%

Operating profit margin

9% or more

0.2%

*Five-year average (FY2019–FY2024)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

The second point is our dedication to test quality. To maintainthe quality of the leading brand in Japan, we have obtainedinternational standards: the U.S. Clinical Laboratory Improvement
Amendments (CLIA) accreditation and the CAP accreditation fromthe U.S. College of American Pathologists. In addition, we havealso built our own quality management system (QMS) which is
implemented across our entire service, from receiving specimens
to reporting test results.
The third point is the speed of our process, from specimen
receipt to test report. We achieve swift test reporting, optimally
timed to the various treatment cycles of each patient. By
achieving both test accuracy and efficiency, while taking steps toincrease speed even further, we are helping to make healthcare
more economical by shortening hospital stays, among othermeans.
In terms of Group synergy, we have established an unrivaled
position by incorporating test reagents newly developed by the
IVD business into the testing services of the LTS business, withits broad customer base. Moreover, at H.U. Frontier, which is incharge of the Group’s sales and marketing, in an effort to grasp
latent testing needs at an early stage, we are strengthening ourcooperation with medical and research institutes that are
constantly working on new medical technologies and treatment
methods. By utilizing this business model, which is unique to theGroup, we will build a foundation to support the next phase ofsociety and medicine and continue to evolve even further.

Medium-term Plan ProgressSpecial Feature

Focus on untapped value in testing data to contributeto solving medical issues
We anticipate that clinical testing and other medical services willchange dramatically in the future due to population trends. For
example, as populations decline in depopulated regions,
physician shortages will become more acute, resulting indiversification of testing locations and timings. In fact, during the
COVID-19 pandemic, many households began to use the H.U.
Group’s rapid antigen test kit as an OTC pharmaceutical product.
The pandemic brought about the practice by the general public oftaking their own specimens and performing tests themselves, andthe practice spread rapidly. Looking ahead, tests that enablepeople to self-check at anytime and anywhere are likely topromote consumer interest and awareness of health, and thedemand is expected to expand even more.
As I mentioned earlier, the H.U. Group has earned strong trustfrom medical institutions and other customers in the core medical
fields of diagnostics, treatment, and surgery. This trust is astrength that can be leveraged as a competitive advantage. We
are striving to develop technologies, create products and provide
services that utilize this strength, not only in clinical testing but ina wide range of healthcare fields. In particular, the testing
technology expertise and massive testing data that we haveaccumulated in the LTS business are essential assets for creating
new services. Currently, we are working to establish infrastructure

GovernanceCorporate Information

Contents

36

that will allow individuals to link their data with medical institutions
using an app for managing personal health records (PHRs). As aforerunner to this, we are running health management services
using PHRs with the WithWellness® health management app
developed by Group company Ishinban, Inc. Instead of medical
institutions managing test data, this approach empowers
individuals to access their data, including test results and medical
histories as needed through a smartphone app or other means.
This can enhance discussions with attending physicians andfacilitates accurate life-saving treatment during emergency
medical transportation. We believe it will also create a platformthat contributes to improved health economics efficiency.
Furthermore, we also focus on untapped value in test data.
SRL performs approximately 400 million tests per year, covering awide range of disease fields, from healthy people to patients withcancer, intractable diseases, and rare diseases. We envisagecombining this huge quantity of test data with data science foruse in statistical analysis aimed at increasing medical careefficiency. We strive to create new testing demand as well as newvalue that contributes to the resolution of medical issues.
The powerful testing capabilities and high-quality testing
provided by the LTS business will enhance the quality of medicalcare and drive ongoing evolution. We consider it important toremain alert to testing technologies both in Japan and overseas
and to constantly update to new technology platforms.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Preparing a nationwide testing system and promoting
optimization of logistics. Building a foundation forfurther growth, using intellectual capital and humancapital as sources of value creation
With the full operation of the H.U. Bioness Complex, we believethat we have created an environment that can provide sustainablevalue and create innovation for further growth, even in a rapidlychanging society and medical environment. With the H.U.
Bioness Complex at the center, we are developing a three-basetesting system, including the Fukuoka Lab (SRL Advanced Lab.
FMA) for the Kyushu area and the upcoming New Kansai Lab.
This system will enable stable provision of testing services.
Meanwhile, at our satellite labs, we will promote alliances withpartner companies who have deep knowledge of local medical

Medium-term Plan ProgressSpecial Featureneeds to provide optimized testing services for each region.
Our strategy of optimizing logistics has entered a new stageof joint logistics with MEDIPAL HOLDINGS. We are currently
conducting a feasibility study on verification of delivery routes
and strategies to reduce the number of vehicles. By around 2025
we expect to see the effects of realizing an optimal logistics
system by establishing a value chain based on a new model of
medical logistics.
Under the medium-term plan, the LTS business has performed
favorably due to factors such as the rapid spread of testing
related to COVID-19 in fiscal 2021. On the other hand, operating
profit decreased sharply in the following year, primarily due todeclined sales in PCR tests and comprehensive testing support
services at airport quarantine stations, leading to exceptionallychallenging business conditions. Our highest priority issues

Nationwide Testing System

General testingin Kyushu

Fukuoka

General testingin Kansai

Nationwide esoteric testing
General testing in Tokyo
metropolitan area

New
KansaiAkirunoCurrently Nihon
RinshoTokyo Central Pathology
Laboratory, Inc.

Pathology specimensfrom western Japan

Pathology specimensfrom eastern Japan

Facility Overview of the H.U. Bioness Complex
Nickname
Location

AkirunoCube
50 Fuchigami, Akiruno City, Tokyo Prefecture

Site area

Approx. 122,000 m2, around 2.7 times the size of Tokyo Dome

Facilities

T-Cube (Testing Laboratory Building), I-Cube (R&D Building),
S-Cube (Management Building), W-Cube (Welfare Building)BCP
measures

Emergency power generators, water tanks (Testing Laboratory
Building), seismic isolation construction (Testing Laboratory
Building, R&D Building), earthquake-resistant construction(Management Building, Welfare Building)

Total floor area Approx. 66,000 m2 (total for all buildings)

GovernanceCorporate Information

Contents

37

include improving profitability and strengthening the businessstructure. To address these, we are committed to reducing fixed
costs by making maximum use of automation at the H.U. BionessComplex while steadily growing our base business with a focus
on cost reduction and expanding our testing fields in response toadvanced medicine.
In tandem with these major measures, we work to constructan ICT platform, which is essential for future growth. Specifically,
we aim to establish a platform for handling a huge quantity ofgenome information, in order to introduce systems that will
enable consumers to monitor their health and use accumulated
test data to motivate behavior change, as well as newtechnologies in advanced fields. In our management of test dataand genome information, we have established rigorous internal
control systems and strive to maintain and continuously improveand enhance security.
To execute these strategies requires that we maximize thevalue of intellectual capital. To incorporate new systems andtechnologies into existing services, we must maintain quality
management systems at a high level, including test procedures,quality control measures, and risk management throughout theentire process from specimen collection to test reporting. Thesesystems are a significant element in strengthening the intellectual
capital of the LTS business. In addition, since it is individual
human resources who maximize intellectual capital, we consider
human capital to be equally important. To draw out the best
performance in each individual, we focus on leadershipdevelopment to enhance our organizational capabilities. For
example, by conducting training at medical institutions, we aim toprovide opportunities for people to acquire deeper learning, suchas learning through actual experience how test results are used inpatient treatment.
In June 2023, I was appointed Executive Officer in Charge of
LTS and President of SRL. I joined the Company 32 years ago,
when the founder, Koichiro Fujita, was President. Over the years,
the industry environment has changed, but the social significanceof clinical testing remains the same. We aim to retain our sense of
responsibility for contributing to society and patients while driving
innovation through the combination of testing technology and data
science to be an effective leader in the future of clinical testing.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Reforming to Become an Innovator:
IVD Business

IVD

Medium-term Plan ProgressSpecial Feature

Governance

Global R&D
SystemContents

38

In-Vitro Diagnostics BusinessBusiness Strengths
Secondposition*

Corporate Information

23.5%

Over

37.9%

Lumipulse®’s share of
immunoassay test
equipment installationsin JapanCapable of a wide range oftests for cancer markers,
infectious diseases,
hormones, and more

Stable, high profit
margin (FY2022)

Overseas64%

70 items
Japan
36%

Overseas52%

Net sales
composition

Japan
48%

Employeecomposition

H.U. Group Holdings, Inc.

Main Products and Services

Fujirebio Holdings, Inc.

Main Companies• Fujirebio Holdings, Inc.

Lumipulse® business• Fujirebio Inc.
• Fujirebio Diagnostics Japan, Inc.
etc.

CDMO and raw
material supply
business

Other products

Fujirebio Inc.
〈 Japan〉

Fujirebio
US, Inc.
〈 U.S.〉

Fujirebio
Diagnostics,
Inc.
〈U.S.〉

Fujirebio
Europe N.V.
〈Belgium〉

Fujirebio
Diagnostics
AB〈Sweden〉

ADx
NeuroSciences
N.V.
〈Belgium〉

Fujirebio
Diagnostics
Japan, Inc.
〈Japan〉

Advanced Life
Science
Institute, Inc.
〈Japan〉

Fluxus, Inc.
〈U.S.〉

As of September 2023

* Created by the Company based on the Report on Results of the 2022 56th Clinical Testing Quality Control Survey(Japan Medical Association)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan Progress

GovernanceSpecial Feature

Corporate Information

Contents

39

Strategy Explanation by the Executive Officer in Charge of the IVD Business
Under the medium-term plan, we fully leverage the IVD business’s strength of test reagent development
capabilities to accelerate our transition to a business model poised for global market growth. We pursue uniquevalue through close cooperation between the IVD and LTS businesses while developing global standard products
to raise the H.U. Group’s profile worldwide.
Group synergies from cooperation between the IVD
and LTS businesses generate unrivaled competitive
advantages in reagents development and newmarkets exploration
The strength of the H.U. Group lies in having the LTS business in
the Group because it is able to prove the value of new reagentsdeveloped by the IVD business. The LTS business handles over
200,000 commissioned tests per day, more than 400 million peryear, giving it the top share of the Japanese commissioned
testing market. Being in a position to prove the value of reagents
creates a significant competitive advantage unrivaled by othercompanies. Fujirebio Inc. alone would never be able to obtainsuch powerful feedback or achieve such speed. For themembers of the IVD business, which develops reagents, this isan amazing environment where they can enjoy considerable
value every day. Having been able to draw on this Group synergy

to rapidly develop and implement a COVID-19 antigen test
reagent in 2020 was one of the significant achievements during
this medium-term plan.
The essential value of the IVD business is in its reagent
development and manufacturing capabilities. The greatest ofthese strengths is its technology for creating reagents from raw
materials, which correspond to the highest upstream point in thevalue chain, mainly in the field of immunoassays. The businesshas a lineup comprising multiple antibodies, which constituteprimary raw materials. It also has systems in place to draw out
the full value of their respective characteristics and rapidlycommercialize them. Accordingly, the role played by the IVD
business in the H.U. Group is to perform a series of processes,
generating new test technologies needed for diseases without
existing effective test methods worldwide and commercializingthese as reagents. Another important role for the IVD business is
expanding reagents into overseas markets when their value has

Net Sales and Operating Profit of the IVD Business

Main Strategies and Initiatives Going Forward(¥ billion)

Goki Ishikawa
Executive Officer in Charge of IVD

90.0

64.3
60.0

30.0

0

70.1

26.7

26.5

12.8
6.1
2019

Net sales (left axis)

2020

2021

40.0

Medium-term Plan Targets and Performance for IVD Business

20.0

Net sales CAGR

59.0

50.0
40.1

60.0

 ocus on utilizing LUMIPULSE® units, having accelerated their installation
FExpand CDMO projects
Accelerate development of new reagents for Alzheimer’s disease, etc.

2022

Operating profit (right axis)

2023(Forecast)

(FY)

0

FY2024 target

FY2022 performance

4.5% or more*

20.5%

EBITDA margin

25% or more

44.0%

Operating profit margin

20% or more

37.9%

*Five-year average (FY2019–FY2024)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

been proven in Japan through cooperation with the LTS business.
In Japan, reagents are required to be of a high level of quality,
and the accumulation of evaluations and clinical data domesticallyis a powerful tool and an advantage in global markets overseas.
Under our medium-term plan, which started in fiscal 2020, weare transitioning to a business model based on the CDMO*
business, aiming to fully leverage our strength in reagent
development capabilities. This business model focuses on the
upstream process of reagent development. In the Japanesemarket, we continue to expand our lineup of dedicated reagentsfor use with our in-house LUMIPULSE® platform. Then, we bringproducts with proven quality and value to the global market bycustomizing them as dedicated reagents for our CDMO partners’
platforms. Former competitors are now our value-co-creating
partners. One of the factors behind our ability to establish
successful win-win relationships with them is the Group IVD
business’s specialization on immunoassays. This is because
companies specialize in specific areas within the diverse fields ofclinical testing, and it is far more efficient in terms of bothdevelopment hours and costs to outsource reagents in nonspecialty areas than developing them in-house. We plan to further
increase the number of contracted items by the end of themedium-term plan.

Number of Contracted CDMO Items (Reagent Manufacture)(Number of items)

60

49

47

42

0

17
0

0

0

2019

2020

2021

Global partners

Regional partners

2022

2023
(Forecast)(Fiscalyear-end)

GovernanceSpecial Feature

One of the changes in the industry brought about by theexperience of the COVID-19 pandemic is that it is becoming morecritical to bring newly developed products to market quickly.
Being an industry leader by developing high-quality reagents andquickly obtaining regulatory approval is the way to receive thefirst-mover advantage, and we also believe it will open the way to
becoming the “global standard.” In fiscal 2020, we worked mainly
on developing COVID-19-related products, but since fiscal 2021,
we have been focusing more carefully on the priority of R&D
themes and concentrating our management resources on the
global development of test reagents for Alzheimer’s disease. In
2022, with the acquisition of ADx NeuroSciences N.V. and Fluxus,
Inc., we have accelerated our development activities, such as
gaining approvals in major countries and expanding our lineup of
test items through ultra-high-sensitivity detection.
Even before regulatory approval, we quickly market newreagents as “Research Use Only (RUO)” products and focus onlistening to market feedback. Obtaining feedback and objective
evaluations from physicians at medical institutions is extremely
important and essential. We will continue to accelerate ourinitiatives as a global leader in the domain of Alzheimer’s disease.
* Contract development and manufacturing organization

Corporate Information

Contents

CDMO

Utilize
partnerships to
supply global
market40

We aim to establish a prominent position in the diagnostic
reagent market in the Alzheimer’s disease domain, withthe goal of becoming a trend leader in immunoassays
With the COVID-19 pandemic, highly sensitive PCR tests earned
recognition among the general public. After their approval as OTC
pharmaceutical products, rapid antigen test kits came to be usedby many ordinary households, and expectations have increased
for kits and services offering simple at-home testing without theneed to visit a hospital. Meanwhile, as the increase in the elderly
population drives up overall medical costs, medical institutions
are taking a tougher stance on evaluating the balance between
the value and price of clinical tests.
Considering this trend, for the IVD business, we will strengthen thedevelopment of reagents that align with this long-term trend. We arefocusing, in particular, on increasing our presence in the diagnostic
reagent market for Alzheimer’s disease, which is expected to see
growth in demand in the future. There are issues with theconventional testing method in this area as it involves cerebrospinal
fluid testing, which imposes a significant physical burden on thepatient during sampling. On the other hand, the ability to detect
pathogenic substances for dementia through blood testing has raised
expectations for resolving this issue. Among two M&As conducted in
2022, the inclusion of ADx NeuroSciences N.V., with its advanced
technologies in the field of neurological diseases, is expected toenhance our portfolio of Alzheimer’s disease-related test reagents.

Global Strategy for the IVD Business ontracted development andCmanufacture of dedicatedreagents for other companies’
equipment
Sale to other companies of raw
materials used for reagent
development and manufacture(antibodies, particles, etc.)

45

40

20

Medium-term Plan Progress

Development of
new offerings

Prove value on
in-house platforms
LUMIPULSE®, etc.

Research anddevelopment

 5% of base net sales
1
invested in R&D¥7.4 billion (FY2022)
Global R&D team(over 300 members)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Meanwhile, the acquisition of Fluxus, Inc. was mainly aimed atacquiring ultra-high-sensitivity detection technology andstrengthening our next-generation platform development
capabilities. By combining the company’s technologies with
Fujirebio’s test reagents and detection methods, we will
accelerate the joint development initiatives that we had beenworking on previously and focus on expanding our lineup ofreagents of high clinical significance that will be used on nextgeneration platforms.
Looking at the industry over a longer horizon, the developmentof ultra-high-sensitivity technologies has enormous potential toaffect the state of immunoassays 10 years down the track. I
predict that the industry will probably polarize into two coexistingdomains: one that can be addressed with the current
chemiluminescence technology and another that requires ultrahigh-sensitivity detection technologies. By leading this trend, theGroup aims to establish a business model that can make a global
contribution to people’s health.

Medium-term Plan ProgressSpecial Feature

Looking at our recent performance, in fiscal 2022 the IVD
business recorded increased sales due to growth of its basebusiness, despite a slight downturn in net sales of COVID-19related products. The theme for fiscal 2023 is further growth of
the base business, including transactions inside the Group andthe Lumipulse® business. In the pharmaceutical industry,
expectations have grown due to a sense of favorable conditions
in general, including significant advances in new treatments for
Alzheimer’s disease, and this has also boosted morale inside theCompany to exceptional levels.

We are committed to discovering and creating new businessmodels, drawing on our global intellectual property.
We also focus on nurturing global human resources
Looking ahead, as we continue to pursue our own unique value,
we will develop and manufacture products that will set global

Upper level: Global meeting held in March 2023 (State of California, United States) Lower level: Global management teamGovernanceCorporate Information

Contents

41

standards and powerfully advance our strategy for expanding thisvalue into markets worldwide. In particular, we recognize thatgenerating innovation in the upstream processes of the value
chain is a source of competitive advantage. By globally managing
and operating our intellectual property, such as antibodies, we
aim to discover and create new business models.
In executing these strategies, we will focus on investing in ouroverseas business and nurturing global human resources. Ourcurrent personnel composition is divided approximately in half
between Japanese and overseas personnel. We have the highest
ratio of overseas employees in the Group. Over the past few
years, we have observed a change in the mindset of employees
in Japan. Unlike the past, when the focus was on supplying
products exclusively in the Japanese market, our employees now
demonstrate a more global perspective. I believe there is anextremely high level of ability to use our accumulated
technologies and raw materials to commercialize products. To
utilize this capability in business expansion overseas, we havebeen increasing human resource exchanges between Japan,
Europe, and the United States, initially targeting managementlevel employees and promoting communication efforts. Now, we
are actively providing all employees with opportunities to gain
overseas experience, including overseas assignments, with theaim of further expanding human resource exchanges. Face-toface interactions can remove barriers that have existed in online
conversations up to now and create a corporate culture where
people can readily engage in discussions for daily decisionmaking and issue solutions. We believe this will lead to growth of
our overseas business, including stronger relationships with
CDMO partners.
Regardless of their position, all employees involved in the IVD
business are aligned in the same direction with their efforts. That
is to achieve a future in which reagents developed in Japan
become global standards and continue to contribute to the healthof people worldwide. We are determined to be an essential player
in the global diagnostic reagent industry and contribute to theGroup’s advancement.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Reforming to Become an Innovator:
HS BusinessHS

Medium-term Plan Progress

GovernanceSpecial Feature

Corporate Information

Contents

42

Healthcare-related Services BusinessBusiness Strengths

41%〈 Sterilization and related services business〉
Share of major hospitals*1 in regions where
the Company has expanded

periods
14 consecutiveof sales growth〈 Nursing care supplies business〉
Stable growth through recurring sales
business model*2 (since 2009)

Business Scale
Sterilization and related
services business

Home-visiting,welfare business

80%

Sterilization and related
services business

Main Products and Services
Sterilization andrelated services
business

Home-visiting,welfare business

Main Companies• Nihon Stery, Inc.
• Care’x, Inc.

717

20%
Sales
composition

Home-visiting,welfare business17 bases

Number of service contracts(as of August 31, 2023)

Home-visiting business(Home-visit nursing, nursing care, etc.)

5 areas8 bases +10 satellites

In-hospital sterilization service areas*3

Nursing care supplies business*1 Share of hospitals with 500 or more beds in 28 prefectures where the Company has expanded (as of September 2023)*2 A model that allows the Company to earn revenue through continuous service usage, rather than completion with a single transaction*3 Tokyo metropolitan area, Chubu, Kinki, Kyushu, Hokkaido, and Tohoku

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan Progress

GovernanceSpecial Feature

Corporate Information

43

Contents

Strategy Explanation by the Executive Officer in Charge of the HS BusinessWe aim for growth by shifting resources to high-added-value operating room services and implementing“Healthcare for You” centered on the home-visiting business targeting the home-visit nursing market.
We also engage in management to encourage individuals to reach their maximum potential, enabling employees
to advance their skills and grow, thereby enhancing the value provided to customers.
Using the strength of working in a position closest to
end users to provide diverse services in response tocustomer feedback and frontline needs
The HS business has used its strength of working in a position
closest to end users to provide diverse services in response tocustomer feedback and frontline needs. In the sterilization andrelated services business, we provide services centered on
hospital operating rooms and central sterile supply rooms. In thehome-visiting and welfare business, we provide services forhome-based healthcare, primarily wholesale nursing careequipment rental and home-visit nursing. In the sterilization andrelated services business, our employees are stationed at
hospitals, giving them ample opportunity to experience firsthandthe issues arising in hospital operations. In 2020, we consolidated
our sales functions in H.U. Frontier, enabling the provision of totalsolutions across all operating companies.

Under the current medium-term plan, we strengthen ourdevelopment of operating room support services in addition to our
in-hospital and outsourced sterilization services. These arecomprehensive services that cover everything from pre-operation
preparation to cleansing during and after operations, as well as
restocking of supplies. Operating rooms are profit centers for
medical institutions. By providing services that help to improve theefficiency of operating room operations and increase theiroperating rate, we aim to contribute to improving hospitalprofitability and establish a new recurring revenue business model.
Given the trend of work style reforms among medical
professionals and task shifting and task sharing by physicians, we
sense a growing need for further outsourcing not only of sterilization
work but also duties related to operating rooms. Looking ahead, I
believe that the important mission of the HS business is to createcomprehensive proposals combining Nihon Stery’s in-hospital
services with the products and services offered by Group companies.

Net Sales and Operating Profit of the HS Business

Main Strategies and Initiatives Going Forward(¥ billion)

Naoki Kitamura

40.0

Director, Managing Executive Officer

30.0

28.4
2.06

32.1

4.0

28.7

27.8

30.0
3.0

2.33
1.80

20.0

2.0

1.06

1.0
2019

Net sales (left axis)

2020

2021

2022

Operating profit (right axis)

Medium-term Plan Targets and Performance for HS Business
FY2024 target

10.00 terilization: Secure profit improvement and business growthSthrough stable growth of in-hospital services
Home-visiting: Capture steady expansion of the market
Welfare: Focus on improving cost structure2023(Forecast)

(FY)

0

FY2022 performance

Net sales CAGR

9% or more*–0.8%

EBITDA margin

12% or more

10.0%

Operating profit margin

9% or more

3.8%

*Five-year average (FY2019–FY2024)

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Meanwhile, in the home-visiting and welfare business, we aretargeting not only the nursing care market but also the home-visit
nursing market, which is the fastest-growing market in the
medical field. The home-visiting business is the entry point for theGroup to expand its business further into the B2C market. In
implementing our objective, “Healthcare for You,” it is extremely
important to understand frontline issues not only in medical
institutions but also through our touchpoints with general service
users. In 2022, we formed a capital and business alliance withGAIA medicare Inc., which is involved in the home-visit nursing
industry, aiming to mutually complement our service areas andcooperate to expand our business base. Behind these initiatives
is a functional separation of medical institutions in the Community
Health Care Vision* and changes in the required functions andnumbers of hospital beds. As the reorganization of medical
institutions in Japan proceeds going forward, demand is
expected to increase not only for hospital services, but also forhome-visit nursing services.
* An initiative of the Japanese Ministry of Health, Labour and Welfare aimed at
preparing an efficient medical care system aligned to the actual conditions in each
community, envisaging a super-aging society in the future

Medium-term Plan ProgressSpecial Feature

Engaging in human capital management andpromoting frontline DX and utilization of intellectual
capital that contribute to enhancing individual
capabilities to sustainably increase corporate value
The nursing and caregiving professions, which support medicalcare, have a high level of mobility, and securing personnel is anurgent issue for hospitals and nursing care service providers. This
presents the HS business with both opportunities and risks.
Moreover, the HS business is also a labor-intensive business, andwe therefore recognize the importance of a management
approach that alleviates the burden on employees while thinkingof human resources as the first priority. Individual job satisfaction
leads to the provision of excellent services, which drives
customer satisfaction. Creating this kind of cycle will ultimately
lead to an increase in corporate value. Therefore, I recognize that
one of my roles is to create an environment in which all
employees can fully realize their potential.
Moreover, as a first step towards increasing employee
engagement, Nihon Stery and Care’x have been holding
discussions mainly with young employees to formulate their

Sterilization and Related Services Business: Growth Strategy for In-hospital Services

In-hospital
services

Central sterile
supply room

Personnel
shortages

Low barrier,high competition

Sterilization(service)

Product sales (recurring/one-off)
Equipment lease, reagent sales, etc.

Sustainable service provision
Sustainable service provision emphasizing
profit by increasing prices in step with rising
personnel expenses and adjusting contracts
appropriately

GovernanceCorporate Information

Contents

44

Purpose (corporate philosophy). After formulating their Purpose,management participated in town hall meetings throughout Japan.
At each meeting, the management team and around ten
employees would have a face-to-face dialogue to enable
management to communicate its perspective and passion. At thesame time, management grasps issues affecting the front lines
directly, which enables them to take countermeasures.
Furthermore, as these dialogues continue, I myself have also been
thinking more deeply about human capital management. We willcontinue aiming to create an environment where every employee
can work with a sense of responsibility, confidence, and pride.
Furthermore, in addition to securing human resources andincreasing the value added to existing services, we are also
promoting measures to set appropriate prices, which meansincreasing the unit price of our contracts. In fiscal 2023, we will makeprogress on resolving issues such as increasing frontline efficiency
and reducing costs, while consolidating our growth foundation forestablishing a sustainable business model. We have also shifted ourvarious manuals into cloud-based electronic formats and video
manuals, with the goal of increasing frontline productivity and training
personnel efficiently. By applying DX to these manuals, we are able
to convert personal tacit knowledge into explicit knowledge as anorganization. At the same time, having made the various digitalbased expertise accumulated through frontline DX into theCompany’s proprietary intellectual capital, we will utilize it to maintainrelationships with existing customers and create new customers.
Above all, we will continue to put our weight behindmanagement that thinks first of human resources, growing
individual capabilities, and implementing measures to maximize
the value provided to customers.

Recurring / product sales
Operating
room

High
personnel
expenses

OP-Tek(service)
High level of knowledge
and expertise

Surgical kits / disposable
equipment, etc.

Recurring/digital (DX)DX of surgical manuals andoperating room systems, etc.

Contribute to improved profitability
for customers
Provide services and goods that contributeto the enhancement of the profitability ofoperating rooms and work style reforms for
medical professionals at appropriate prices

Skill improvement training at
NS Training Center Daiba(Nihon Stery)H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

GovernanceCorporate Information

Contents

45

Directors and Officers
Directors

Shigehiro Aoyama
Shigekazu Takeuchi

Naoki Kitamura

Director
Chairman, President and Group CEO

Director
Managing Executive Officer

Outside Director
Outside Director, Takamatsu
Construction Group Co., Ltd.
Chairman, the Distribution Economics
Institute of Japan

Sachiko Awai

Futomichi Amano
Outside Director
Futomichi Amano CPA OfficeOutside Director
Outside Director (who is an Audit &Supervisory Committee Member), A.D.
Works Group Co., Ltd.
Outside Director, INFOCOMCORPORATION
Outside Director (who is an Audit &Supervisory Committee Member),
BP Castrol K.K.

Ryoji Itoh
Outside Director
Managing Director, Planetplan, Inc.
Outside Director, SATO HOLDINGSCORPORATION
Senior Researcher at Keio ResearchInstitute at SFC, Keio University

Keiji Miyakawa
Moegi Shirakawa
Outside Director
Partner, Anderson Mori & Tomotsune
Member of the Business Accounting
Council, Financial Services Agency

Outside Director
Representative Director, N.I.Partners Ltd.
Outside Director, Member of the Board,
GungHo Online Entertainment, Inc.
Senior Advisor, Lincoln International Inc.
Executive Advisor, MASH Holdings Co., Ltd.

Hitoshi Yoshida
Outside Director
Former Director and Vice President,
ASKUL Corporation

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

Corporate Information

GovernanceContents

46

Composition of Committees and Knowledge, Experience, and Skills Expected of Directors
Committees ( ◎ indicates Chairperson)
Number ofYears in Officeas Director

Independent
Officer

Shigekazu Takeuchi (Male)

7

Naoki Kitamura (Male)

Name

Knowledge, Experience and Skills
Business
Management and Legal Affairs andManagement
Risk Management
Strategy

Nominating
Committee

Compensation
Committee

Audit
Committee

―

―

―

―

●

5

―

―

―

―

●

Shigehiro Aoyama (Male)

5

○

◎

―

―

●

Futomichi Amano (Male)

6

○

―

―

◎

Sachiko Awai (Female)

New

○

―

○

―

Ryoji Itoh (Male)

9

○

○

◎

―

Moegi Shirakawa (Female)

1

○

―

―

○

Keiji Miyakawa (Male)

2

○

―

○

○

●

●

Hitoshi Yoshida (Male)

New

○

○

―

―

●

●

Finance andAccounting

Human Resourcesand Human
Resource
Development

Life Sciencesand Healthcare

●

●

●

●
●

●

●

●

●

●

●

●

ＤＸ

●

●

●
●
●

Note: The above matrix does not indicate all of the skills of the Directors, and only a maximum of the top three skills they are expected to demonstrate are indicated.

Executive Officers
Chairman, President andGroup CEO

Shigekazu Takeuchi

Executive Officer in
Charge of IVD

Goki Ishikawa

Executive Officer and CIO

Toshihiko Shimizu

Managing Executive Officer

Naoki Kitamura

Executive Officer in
Charge of Sales

Shunichi Higashi

Executive Officer in
Charge of Corporate Planningand Management

Tadashi Hasegawa

Executive Officer in
Charge of LTS

Makoto Matsumoto

Executive Officer and CFOAtsuko Murakami

Executive Officer and CTO

Kazuya Omi

Executive Officer in
Charge of General Affairs

Hiroaki Kimura

H.U. Group Holdings Integrated Report 2023

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47

Messages from Newly Appointed Outside Directors

Sachiko Awai
Outside Director

I have had a long career in B2C business, during which I have cultivated a customer-oriented mindset
based on a frontline focus. As a business manager, I was involved in the formulation andimplementation of effective strategies founded on customer creation. Through my involvement inmanagement of several companies, I focused on creating open environments where employees felt
safe to express their opinions. The front line where a company interacts with its customers is atreasure trove of information that offers business hints. To achieve our targets, I believe it is importantto pick up on issues on the front line constantly and efficiently and advance them in order to bringabout results.
In addition to its diversity policy, the H.U. Group has declared its respect for diverse values, andstrives to secure diverse human resources, without regard to nationality or gender. The Group has
also focused on promoting active participation of women and has set quantitative targets, including
the percentage of female managers. However, in order for diversity to bring about management
results, it is important that management actively engage in instilling the concept of diversity in thecompany first. Then, it is necessary for all managers to recognize the value of diversity and work
towards management that empowers the individuals that make up the organization. In addition, toenable employees to fully realize their individual potential, it is important to have organizational andsystematic support for human resource development in place.
Looking ahead, to enable the H.U. Group to increase its presence in society, I expect all
employees to apply the Group’s Mission and Vision, not only as words, but in their everyday actions
as they implement them on the front lines. I aim to contribute to sustainable growth by helping toresolve the issues facing management through my advice based on my personal experience andindependent outside perspective.

Hitoshi Yoshida
Outside Director

In my view, sustainable increase in corporate value depends on five basic points: increasing growthpotential, increasing earning potential, enhancing investment efficiency, improving financial position,and increasing engagement. Based on these, my personal focus is on ensuring that strategies arealways formulated on a customer-first basis and that the strategies we formulate are completely
understood by employees. I also strive to ensure that our criteria for determining the achievement oftargets are customer-oriented and that management is constantly aware of the frontline situation interms of workplace, products, and capabilities. While keeping these factors in mind, I aim to realize
an increase in corporate value for the H.U. Group.
I have had experience with promoting DX strategy in my previous position, and I consider it
important to foster an awareness of the difference between digital transformation and digitalization
when talking about DX. In essence, DX is more than simply digitalizing operations; I recognize that it
involves creating the optimal customer experience and driving significant corporate growth. I believethat making sure all employees understand this perspective when they act is the key to successful DX.
The H.U. Group is currently embarking on a new growth stage. With the full-scale operation of the
H.U. Bioness Complex, a new business model with high-quality testing and cost competitiveness will
be realized. My role in this phase is to encourage the realization of a host of new initiatives towards“Healthcare for You” and to supervise their progress and operational execution from an objective
standpoint. In particular, I will focus on contributing to getting the business centered on the H.U.
Bioness Complex on track.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

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48

Corporate Governance
Basic Approach
H.U. Group Holdings is working to enhance managerial efficiency
based on its stated Mission to “Create new value in healthcare andthereby contribute to human health and the future of medical care,”along with our Vision, Values and Traits. We fully recognize the vital
importance of cooperation encompassing a wide range ofstakeholders both inside and outside the Company. Accordingly, weare committed to the establishment of a corporate governancestructure that encourages greater managerial transparency andaccelerates proper decision-making.

Corporate Governance Structure
We fully recognize the importance of strong and thorough corporate
governance, and are committed to the establishment of agovernance structure that encourages greater transparency andaccelerates proper decision-making at all levels of oversight,
management and operation.
We adopted the management configuration of a “company withthree committees” with the aim of achieving clear separation ofoversight and executive functions, establishing an implementation
structure capable of operating with greater speed and enhancing
oversight of Group companies. Under this configuration, we haveestablished three committees: the Nominating, Audit andCompensation Committees, in accordance with laws and ordinances.

Nominating Committee [8 Meetings in Fiscal 2022]

Audit Committee [17 Meetings in Fiscal 2022]

The Nominating Committee has the authority to determine thecontent of proposals related to the appointment or dismissal of
directors to be submitted to the General Meeting of Shareholders, torecommend candidates for representative executive officers andexecutive officers to the Board of Directors, and to make proposals
for their dismissal. All members of the Nominating Committee are
selected from part-time outside directors.

The Audit Committee audits the execution of duties by directors andexecutive officers, prepares an audit report, and determines thecontent of proposals to be submitted to the General Meeting of
Shareholders concerning the appointment and dismissal of the
Accounting Auditor as well as the non-reappointment of them. All
members of the Audit Committee are appointed from among thepart-time outside directors, given the view that members of the Audit
Committee must maintain a high degree of independence.
Members of the Audit Committee participate in major meetings,
such as the Risk Management Committee, the Group Compliance
Committee, and other committees, or check the contents of suchmeetings. They also hold regular liaison meetings with the Internal
Audit Department and the auditors of subsidiaries, and conduct direct
audits of the execution of duties as necessary. The results of these
activities are regularly reported to the Board of Directors. The Audit
Committee exchanges ideas regularly with the Accounting Auditor byrequesting them to explain and report the initial audit plan, status ofaudits during the term and results of the year-end audit.

Compensation Committee [7 Meetings in Fiscal 2022]

The Compensation Committee has the authority to formulate anddetermine policies regarding the determination of the content of
individual compensation received by directors and executive officers.
All members of the Compensation Committee are appointed fromamong part-time outside directors.
The June 20, 2023 Compensation Committee meeting revised thecompensation system for the executive officers of the Company andfor directors, etc. (excluding outside directors) of certain
consolidated subsidiaries.

Corporate Governance Structure
General Meeting of Shareholders
Election/Dismissal

Election/Dismissal

Board of Directors [13 Meetings in Fiscal 2022]

The Board of Directors, as the decision-making body for corporate
management, resolves matters required by law, decides andapproves basic management policies such as medium-term plans
and single-year budgets, as well as important matters related to the
execution of management operations, and supervises the duties of
directors and executive officers.
The Company stipulates the balance, diversity, and size, etc. of
the Board of Directors in the H.U. Group Corporate Governance
Policy. We appoint outside directors from a wide range of fields toreflect diverse opinions in the discussions of the Board of Directors
and to strengthen the supervisory function.

Board of Directors
Collaboration

Accounting
AuditorNominating
Committee

Audit Committee

Executive Department

Internal control
audits,accounting audits

Internal Audit
Department

Chief Executive Officer

Internal
auditsExecutive Officers

Compensation
Committee

H.U. Group Holdings Integrated Report 2023

We have established the Secretariat of the Audit Committee as abody under the direct control of the Audit Committee. The appointment
and dismissal of the staff of the Secretariat of the Audit Committee
and other details of their professional treatment, such as performance
evaluation and interdepartmental transfer, are subject to prior approvalby the Audit Committee based on advance briefing in order to ensure
the independence of the staff.

Board of Directors and Appointment of Directors
The Company appoints internal and outside director candidates
irrespective of their gender, race, or nationality from the perspectiveof their: 1) capacity to manage based on knowledge and experiencein wide ranging fields outside the scope of business experience
gained within the Company, 2) due recognition of the role
management should play in society, avoiding disproportionate
emphasis on the interests of management or certain stakeholders,and 3) ability to properly oversee the management in the executionof its duties. Moreover, the Company appoints outside director
candidates primarily from the following wide range of fields:• Experience as managers of operating companies;• Experts in public administration in the fields of medical services,
insurance, etc.;• Experts in corporate and business law, corporate accounting andcorporate finance;• Experts in providing advice and support to corporate
management; and• Experience as managers of global business operations.
The Company appoints as candidates for outside director those
who have been nominated by the Nominating Committee upon
having determined that they have the aforementioned experience,
while also showing that they are capable of maintaining
independence from management and possess character andinsights befitting an outside director.
The Company appoints as candidates for internal director those
who have been nominated by the Nominating Committee on thebasis of the criteria listed below:

Value Creation Story

Medium-term Plan ProgressSpecial Feature• Possess expertise related to the Company’s business operations;• Exhibit outstanding capabilities for making business decisions andmanagement execution;• Exhibit outstanding capabilities in terms of leadership,decisiveness, foresight and planning; and• Possess character and insights befitting a director.
As a basic rule, a majority of the Company’s directors are to beoutside directors with a high degree of independence. Also, theCompany deems that no more than 10 directors should serve on the
Board of Directors in order to ensure lively and substantive discussion.

Evaluating the Effectiveness of
the Board of Directors
The Board of Directors considers it important to adopt a third-party
perspective in its processes for evaluating its own effectiveness, andthis evaluation process is carried out once a year in order to verify
said effectiveness. As such, in fiscal 2022, it brought on board an
independent, third-party organization to serve as an advisor in
performing evaluations related to a number of different matters. Said
matters include the composition of the Board of Directors; its
effectiveness (including monitoring how it carries out work); theeffectiveness of the Nominating, Compensation, and Audit
Committees; the management of the Board of Directors; structures
related to support and coordination with outside directors; andrelations with shareholders and other stakeholders. The evaluations
were carried out by ensuring impartiality by following a process of
having eight directors respond to questionnaires and having a thirdparty organization tabulate and analyze the responses underconditions in which anonymity was guaranteed.

Evaluation Results

The results of the tabulation and analysis were reported to the Boardof Directors in May 2023. It was found that the effectiveness of theBoard of Directors had improved in terms of its discussion ofimportant investments.

GovernanceCorporate Information

Contents

49

Initiatives in Response to the Evaluation Results

We have evaluated the effectiveness of the Board of Directors
continuously since April 2016 and implemented initiatives in line withthe evaluation results to increase the board’s effectiveness.
Since the previous evaluation of effectiveness conducted in April
2022, we have implemented the following measures to improve theboard’s effectiveness.
(1) E nsuring of timely advance distribution of discussion materials
relating to agenda items for Board of Directors meetings(2) H olding of advance briefing meetings on key agenda items for
Board of Directors meetings(3) Holding of sessions for directors to discuss medium- to longterm strategy(4) H olding of opinion exchange meetings for outside directors topromote communication among them(5) H olding of regular opinion exchange meetings between
outside directors and the Group CEO and officers in charge ofeach business(6) H olding of discussions on the prioritization of material issues(materiality)

Sustainability Governance
As a company with three committees, the Company has establishedan implementation structure capable of clearly separating oversightand executive functions, and operating with greater speed. The
Company is also working under the same corporate governancesystem with respect to sustainability.
With the president and group CEO of H.U. Group Holdings aschairman, the H.U. Group Sustainability Committee discusses thebasic policy and activity plans in relation to sustainability, and reports
the content of these discussions to the Board of Directors.
Towards resolving its material issues, the Group released key
performance indicators (KPIs) and targets related to sustainability
activities as a Sustainability Roadmap, and efforts are underway toachieve these goals.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Cross-shareholdings
The Company and its subsidiaries do not own cross-holding stocks
in order to obtain stable shareholders. However, the Company may
maintain strategic holdings of other listed companies’ shares tostrengthen business partnerships or its business activities withthird parties, as strategic alliance is one of the growth strategies of
the Group.
Boards of Directors of the Company and its subsidiaries conduct
verification of each strategic shareholding on an annual basis
considering the management environment and business alliance.
The Company discloses the verification results. In fiscal 2022, theCompany held three listed stocks (approximately ¥150.0 million) thatwere deemed suitable for holding as a result of the verifications.
In exercising voting rights of strategic shareholdings of theCompany and its subsidiaries, we comprehensively make decisions
based on whether each proposal contributes to the partnercompany’s value. Moreover, we do not vote in favor of proposals
that threaten to impair the Company’s value or shareholder value.

Compensation for Directors andExecutive Officers, etc.
H.U. Group Holdings, Inc., whose corporate name expresses“Healthcare for You,” aims to make further progress as a corporategroup that contributes to the development of healthcare based on its
desire to provide optimal healthcare services to all by addressing eachand every one of its customers individually. To realize this desire and topromote global management among other items, the Company revised
the compensation system for directors and executive officers in July
2023. In addition, the Company has newly established the following
Basic Principles of Executive Officer Compensation and will operate acompensation program in accordance with the principles.

Medium-term Plan ProgressSpecial Feature

Basic Principles of
Executive Officer Compensation• Encourage all executive officers to work together to develop
and implement measures to sustainably increase theCompany’s market capitalization• Strongly motivate executive officers to aggressively expand
business on the premise of global expansion byemphasizing the concept of pay-for-performance in thecompensation system, system design, and operation• Appropriately reflect the assessment of non-financial
initiatives in contributing to the realization of a healthy andprosperous society through our business, which is thecornerstone of the Company’s sustainability• Continually deepen shared interests with all stakeholders andenhance long-term trust in the Company by strengthening
continued ownership of the Company’s shares

Policy and Determination Methods on Amounts ofCompensation for Directors and Executive Officers or
Calculation Method Thereof

In accordance with the provisions of the Companies Act
concerning companies with three committees, the Company, at theCompensation Committee, has established the following policies
for determining compensation for its directors and executive
officers and determines the amounts and other conditions ofcompensation, etc. for respective directors and executive officers
in accordance with these policies.
In addition, as the Company is a company with three committees(Nominating, Audit and Compensation) pursuant to the Companies
Act, it has established a Compensation Committee fully constituted
by outside directors, including the Chairperson, as stipulated by theCompanies Act.

GovernanceCorporate Information

Contents50

1. Method for determining the policy for determining
compensation, etc. for directors and executive officers
The Compensation Committee of the Company has built an
operational process emphasizing objectivity and transparency basedon the premise of promoting a high level of independence indetermining the compensation system for directors and executive
officers. In establishing a policy for determining the compensation for
directors and executive officers, the Compensation Committee of theCompany collects information and recommendations, etc. fromoutside compensation consultants and verifies the appropriateness ofcompensation for directors and executive officers each fiscal year
based on objective and sufficient information, including recent
developments, trends in discussions, and other companies’ systems,
etc. regarding compensation for directors and executive officers.
Regarding the involvement and participation of the outsidecompensation consultants on the Compensation Committee, theyattend Compensation Committee meetings as necessary and only
provide indirect support for effective deliberations and consensus
building, but they do not make any recommendations, etc. on theappropriateness of compensation.

2. Approach to compensation for directors andexecutive officers, etc.

Compensation for directors and executive officers of the Company
will be paid in the form of fixed-amount compensation based on
official responsibilities in consideration of the scope and degree of
responsibility for Group management and other aspects, and will not
be paid in the form of retirement benefits at the time of retirement.
The amount of performance-based compensation will be changed
depending on evaluation indicators such as net sales, operating
profit, net profit and total shareholder return (TSR). Directors serving
concurrently as executive officers will receive compensation as
executive officers.

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Directors’ compensation

Directors’ compensation will be determined as nil, or as a combinationof fixed-amount compensation and share-based compensation inconsideration of the duties of the respective directors.
The Company will pay compensation to outside directors basedon the details of their supervision activities, in addition to the
combination of prescribed fixed-amount compensation and sharebased compensation.

Special Feature

GovernanceCorporate Information

Contents

51

Compensation Types and Breakdown by Job Title
Not KPI-linked

Executive officers’ compensation

Executive officers’ compensation will be determined in a
combination of fixed-amount compensation, performance-based
compensation and share-based compensation in consideration of
their duties.

3. Compensation system

Fixed Compensation

Variable Compensation

1 Basic Compensation

3 RSUs (Restricted Stock Units)

Representative executive officer: 33.3%

Representative executive officer: 11.1%

Other executive officers: 40.0%–50.0%

Other executive officers: 8.3%–10.0%

Outside directors: 100%

Outside directors: —2 STIs (Short-Term Incentives)

4 PSUs (Performance Share Units)

Representative executive officer: 33.3%

Representative executive officer: 22.2%

Other executive officers: 25.0%–30.0%

Other executive officers: 16.7%–20.0%

Outside directors: —Outside directors: —KPI-linked(KPI: Key performance indicator)

Share-based Compensation

Monetary Compensation

Compensation received by executive officers of the Company
comprises 1 basic compensation as fixed compensation, 2 shortterm incentives (STIs), which are linked to the level of achievement oftargets such as the single-year consolidated performance of theGroup and business companies for which the executive officers are
responsible, 3 restricted stock units (RSUs), which promote sharedvalue with shareholders through the holding of shares and 4
performance share units (PSUs), which are linked to the level ofachievement of the enhancement of the Company’s medium- tolong-term corporate value. STIs, which are cash compensation, and
RSUs and PSUs, which are non-monetary compensation (sharebased compensation), are both organized as variable compensation.
When determining the compensation ratio by type forcompensation for the Company’s executive officers, the Company
reflects the weight of management responsibilities in thecompensation composition by position by increasing the ratio of
variable compensation as the position of the executive officer getshigher, while taking into consideration market compensation data forcompanies that are similar in scale to the Company based on officer
compensation surveys carried out by external research institutions.
Furthermore, to ensure that compensation is set at a levelcommensurate with the capabilities and responsibilities, etc. requiredof the management of the Company, the Compensation Committee
conducts a verification of its appropriateness using compensation
benchmarks and so forth every fiscal year.

Medium-term Plan Progress

Please see p.52 for further details on the above figure.

H.U. Group Holdings Integrated Report 2023

1

3

2

4

1

3

2

4

Value Creation Story

Medium-term Plan Progress

1 Basic Compensation•A lthough the benchmark for compensation is their titles, compensation is paid toexecutive officers after taking into account how each of them has performed in
his or her duties, etc.
• In addition to the prescribed fixed compensation, compensation is paid to
directors in accordance with the details of their supervisory activities.

Special Feature

1

3

2

4

1

3

2

4

2 STIs•T he amount paid is linked to short-term performance based on single-year
performance.
•E valuation of single-year performance is based on the evaluation of consolidated
performance of the Group, and evaluations of certain executive officers take into
account segment performance based on their respective areas of responsibility.
Breakdown by Job Title

Single-year Performance(1) Consolidated
Group Performance(2) Segment
Performance

100%

—

60%–100%

0%–40%

Representative executive officer
Other executive officers(1) Consolidated Group Performance
KPI

WeightTargetRange of Variationin Payment

Consolidated
net sales

50%

Absolute amount (as per plan)

0%–200%Consolidated profit

50%

Absolute amount (as per plan)

0%–200%(2) Segment Performance
KPI

WeightTargetRange of Variationin Payment

Net sales

50%

Year-on-year growth rate

0%–200%Operating profit

50%

Absolute amount (as per plan)

0%–200%GovernanceCorporate Information

Contents

3 RSUs• RSUs are share-based compensation in which the Company allocates RSU
points (1 point = one share of the Company) for the year of service in July eachyear, then grants money corresponding to the Company’s common shares andthe tax amount three years after the allocation of points.
• The number of RSU points allocated is calculated as the standard RSU
compensation amount for each individual, as determined by the Company’s stockcompensation regulations, divided by the average closing price of the Company’s
stock for the month of May each year (hereinafter, the “set stock price”).
• In granting the shares, shares of the Company’s common stock (hereinafter, the“Company’s shares”) corresponding to the allocated RSU points are granted.

4 PSUs• PSUs are share-based compensation in which the Company allocates PSU
points (1 point = one share of the Company) for the year of service in July eachyear, then grants money corresponding to the Company’s common shares andthe tax amount three years after the allocation of points, having multiplied thenumber of points by a performance-linked coefficient in accordance with thedegree of achievement of KPIs.
• The number of PSU points allocated is calculated as the standard PSU
compensation amount for each individual, as determined by the Company’s
stock compensation regulations, divided by the set stock price.
• In granting the shares, the Company’s shares corresponding to the confirmed
PSU points, calculated as the allocated PSU points multiplied by theperformance-linked coefficient, are granted.
WeightRange of Variationin Payment

Relative TSR

90%

0%–200%ESG indicator10%

0%–200%KPI

52

H.U. Group Holdings Integrated Report 2023

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53

Risk Management
Basic Approach to Risk Management andManagement Structure

Framework of Group Risk Management

Risk is managed according to a uniform policy that applies to H.U.
Group Holdings and its Group companies as defined in the risk
management structure within the Risk Management Rules. The Risk
Management Committee was established with the purpose ofpromoting risk management for the Company and the entire Group.
The committee is chaired by the CFO and is composed of executive
officers other than the representative executive officer. It meets atleast once a year, with the results reported to the Board of Directors.
The committee’s detailed activities include:(1) Centralized oversight of the risk management of each Group
company;(2) Identification of risks facing the entire Group and risks pertaining
to the misconduct of management, as well as management ofcontrol execution;(3) Identification of risks that should be disclosed and managementof control execution; and(4) Matters concerning the risk management of the Company

Scope of Risk Assessment and Risk
Identification Process
We identified and assessed the priority risks to be addressed
for each company, including consolidated subsidiaries inprinciple, based on the specific risk for its business category,business scale, and other factors and risk severity. Taking
account also of the individual company’s own assessment, theRisk Management Committee as a whole then assessed eachrisk on a 5-level scale based on its probability, frequency, anddegree of impact on a consolidated Group basis.

H.U. Group Holdings
Representative Executive Officer
Instructions

Risk Management Committee
Centralized oversight of Group-wide risks*Significant Business Risks

Business Risks(1) Risks related to information handling and information systems(2) Risks related to quality control and quality assurance(3) Impacts due to the stoppage of or constraints placed on
business activities as a result of man-made disasters,
infections, etc.
(4) Impacts due to the stoppage of or constraints placed on
business activities as a result of natural disasters, climatechange, etc.
(5) Risks related to research and development andtechnological innovation(6) Risks related to
impairment accounting

Risk management policy
Instructions to review risks

WEB

Business Risks
https://www.hugp.com/en/ir/management/risk.html

Chairperson: CFO
Office support: Corporate Strategic Division(7) Risks related to mergers
and acquisitions (M&A)(8) Risks related to provision of
products and services andprocurement of materials
and raw materials(9) Risks related tointellectual property(10) Risks related to statutory regulation(11) Impacts caused by changes in themarket environment(12) Risks related to overseas businessexpansion(13) Risks related to the recoverability ofdeferred tax assets(14) Risks associated with the executionof management strategy

Risk assessment results
Status of implementation of measures

Reporting at least once a year

Group Companies
Group Company Risk Management Committee
Approval of risk assessments and decisions on action plans
Instructions

See the following website for details of risks.

Reporting

Reporting

Departments at Group companies
Risk assessment and establishment of action plans* Risk is subject to management using a risk control matrix, which consists of risk identification, risk analysis and assessment based on whether the risk applies Groupwide or to a single operational process, the probability of its materialization and degree of impact, and implementation of risk countermeasures

H.U. Group Holdings Integrated Report 2023

Value Creation Story

Medium-term Plan ProgressSpecial Feature

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54

Contents

Compliance
Formulation of the Code of Conduct
The H.U. Group has formulated a Code of Conduct to strengthen
compliance Group-wide that has been adopted by all Group
companies. In addition to the Japanese version, the code is alsoavailable in English, Chinese, and Vietnamese.

Promotion of Compliance AwarenessTo promote understanding of compliance, the H.U. Group has
prepared a Compliance Handbook that is distributed to all
employees, conducts compliance training once a year and an annualcompliance survey, and sends out a monthly compliance-related
e-mail magazine.
Since it was first issued in 2016, the Compliance Handbook has
been updated to take account of the latest trends and social
requirements. It is used to raise awareness of compliance, including
through reading sessions in each corporate department. We also
integrate compliance-related content across our range of training
programs.
We carry out e-learning using shared tools available at eachcompany as part of compliance training. Employees at workplaces
that do not have access to the internet take classes using paperbased materials.
We also send a monthly e-mail magazine providing compliancerelated information to all employees who have a company e-mailaddress and work further to instill compliance awareness by setting
mini-tests and issuing other self-study materials.

Compliance Promotion Structure
The Group has put in place a system under which the H.U. Group
Holdings’ Compliance Committee provides Group-wide guidance.
The committee, an advisory body to the representative executive
officer chaired by the executive officer in charge of legal affairs,
consists of all executive officers, excluding the president and Group
CEO, and the general manager of the Legal Department. Meeting
once a year, the committee is responsible for educating andinforming on laws and on the Code of Conduct and monitoring
compliance, formulating related systems and measures, addressing
violations of laws and the code and issuing relevant instructions, andcarrying out independent surveys. Additionally, it receives reports
from each Group company on compliance with laws and the codeand provides appropriate guidance in response.

Whistleblowing System
Since 2013, the Group has operated the H.U. Group Hotline, awhistleblowing service to enable us to detect and address complianceissues at an early stage. All Japanese Group companies are coveredby this system, which provides access to advice from external
consultants, to whom reports can be made anonymously. Where
serious incidents come to light, they may be reported if appropriate tosenior management. The Compliance Department reports regularly on
the status of whistleblowing to the Audit Committee, which consists ofthree outside directors. From August 1, 2022, the ComplianceDepartment took over responsibility for the whistleblowing systemfrom the Legal Department’s Compliance Section. This organizational
reform was designed to further strengthen efforts to uncover andaddress hidden risk across the Group.
Furthermore, in response to the amended Whistleblower
Protection Act enacted in June 2022, a structure for appropriate
handling of whistleblower reports has been put in place. In addition
to reformulating our Whistleblower Report Handling Rules, we havedesignated staff to deal with whistleblower reports and have
imposed a duty of confidentiality regarding information that could
identify the whistleblower.

FY2018FY2019FY2020

FY2021

FY2022

109

125

134

116

155

Number ofreports madethrough the H.U.
Group Hotline

Whistleblowing System
H.U. Group Holdings
Compliance Committee
Instructions

Audit Committee

Reporting

Reporting

Office support: Compliance Department

Outside Contractor
Whistleblowing Hotline

Whistleblower

Research Ethics
The H.U. Group has established the H.U. Group Research Ethics
Committee as an independent body for neutral and fair review of
the clinical tests and research conducted at each Group company
from an ethical and scientific standpoint. The committee rules, thelist of members, and a summary of discussions are published on
our website.

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Company Recognition / Participation in Initiatives
ESG Index Selection
FTSE Blossom Japan Index*1

An ESG investment index specializing in Japanese companies
created by FTSE Russell. The H.U. Group was selected for the firsttime in 2023.

ESG Ratings
MSCI Japan ESG Select Leaders Index*2

The index is composed of stocks of companies with superior ESG
performance relative to their peers within the MSCI Japan IMI index
covering Japanese stocks. The H.U. Group has been selected as aconstituent for seven consecutive years since 2017.

MSCI ESG Ratings*2

MSCI ESG ratings are global evaluation indicators for ESG
investment that perform comprehensive evaluation of environmental,social and governance aspects of over 8,500 companies worldwide,
and rate them in seven levels from the highest rating of “AAA” to thelowest of “CCC.”
The H.U. Group has earned the highest AAA rating for two
consecutive years since 2022.

MSCI Japan Empowering Women Index (WIN)*2

The index is composed of stocks of companies with excellent
gender diversity scores, within the MSCI Japan IMI index covering
Japanese stocks. The H.U. Group has been selected as aconstituent for five consecutive years since 2019.

FTSE Blossom Japan Sector Relative Index*1

An ESG investment index specializing in Japanese companies
created by FTSE Russell, relatively reflecting the performance ofJapanese companies with excellent ESG initiatives in each sector. It
evaluates climate change initiatives and governance improvements
in sectors with particularly high greenhouse gas emissions topromote the transition to a low-carbon society. The Company has
been selected for two consecutive years since 2022.

ISS ESG ESG Corporate Rating

S&P/JPX Carbon Efficient Index

This index scores according to environmental
information disclosure and carbon efficiency
level (sales-based carbon emissions intensity).
The H.U. Group has been selected as aconstituent stock for six consecutive years
since 2018.

The H.U. Group was certified with the “Prime” rating in the “ESG
Corporate Rating” by ISS ESG, which is a well-known ESG ratingsorganization that is the ESG investment solutions business unit of
Institutional Shareholder Services, which is the world’s largest proxyadvisory firm for the first time in 2023.

SOMPO Sustainability Index

The H.U. Group has been selected as a constituent stock of the
SOMPO Sustainability Index, which is operated by Sompo AssetManagement Co., Ltd., for three consecutive years since 2021.

*1 FTSE Russell (registered trademark of FTSE International Limited and Frank Russell Company)
hereby certifies that H.U. Group Holdings, Inc. has qualified for inclusion in the FTSE Blossom
Japan Index and the FTSE Blossom Japan Sector Relative Index as a result of independent
research. The FTSE Blossom Japan Index was created by global index provider FTSE Russell,and designed to measure the performance of companies with excellent environmental, socialand governance (ESG) responses. The FTSE Blossom Japan Index and the FTSE Blossom
Japan Sector Relative Index are widely used to create and evaluate sustainable investment
funds and other financial products.
*2 The use by H.U. Group Holdings, Inc. of any data of MSCI ESG Research LLC or its affiliates(“MSCI”) and the use of MSCI logos, trademarks, service marks, or index names herein do notconstitute a sponsorship, endorsement, recommendation, or promotion of H.U. Group
Holdings, Inc. by MSCI. MSCI services and data are the property of MSCI or its information
providers and are provided “as is” and without warranty. MSCI names and logos are trademarks
or service marks of MSCI.

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Other Ratings
CDP

JPX-Nikkei Index 400

Certified Health & Productivity Management
Outstanding Organizations Recognition Program:
White 500

Participation in Initiatives

The H.U. Group has received the A- rating, whichis leadership level, in Climate Change Report 2022
by CDP*3, which is an international non-profit
organization promoting disclosure of environmental
information by companies and local governments,
for two consecutive years since 2021. The H.U.
Group was also selected as a Supplier
Engagement Leader, which is the highest rating in
the Supplier Engagement Rating, for the first timein March 2023.

The Company and its consolidated
subsidiaries, SRL, Fujirebio and H.U.
Frontier, were selected for two consecutive
years from 2022 in the large enterprise
category of the 2023 Certified Health &Productivity Management Outstanding
Organizations Recognition Program (White
500) operated by the Japanese Ministry of
Economy, Trade and Industry.

The H.U. Group was selected as a constituent stock of the
JPX-Nikkei Index 400, which is a stock index jointly administeredby JPX Market Innovation & Research, Inc. and Nikkei.
The JPX-Nikkei Index 400 is a stock index listing companies
with strong investor appeal based on meeting a range of global
investment standard requirements, such as efficient use ofcapital and investor-focused management.

Signing of UNGCIn March 2019, we signed in support of the Ten
Principles of the United Nations Global Compact(UNGC) and declared our commitment toongoing efforts to fulfill them.

Supporting Business Ambition for 1.5℃

*3 A non-profit organization launched in the UK in 2000. It is operated with the support of investors invarious countries, conducts studies on climate change, etc. covering private companies toevaluate 13 items including corporate governance, risks and opportunities, business strategy, andtargets and results, and rate them in eight levels from the highest rating of “A” to the lowest of “D-.”In October 2021, we signed on to this campaign, led by UNGC, the We
Mean Business Coalition, and the Science Based Targets (SBT)
Initiative, which calls for the setting of targets to limit global
atmospheric temperature rise to 1.5℃.

RatingDirection of rating

A (no change)
Stable (no change)

The H.U. Group was included inDigital Transformation (DX) Stocks
2023 by the Ministry of Economy,
Trade and Industry, the Tokyo
Stock Exchange and theInformation-technology Promotion
Agency, Japan for the first time.

DX Certification

Since February 2023, the H.U.
Group has been certified as a DX
Certified Operator under the DX(Digital Transformation)
Certification system establishedby the Ministry of Economy,
Trade and Industry.

Participating in the Ministry of the Environment’s
Water Project

The H.U. Group is participating in the Water Project launched by the
Ministry of the Environment when the Basic Act on Water Cycle cameinto effect in July 2014. We support initiatives by industry, government
and academia to utilize and preserve a good water cycle, and will
promote not only business activities in the H.U. Group, but also raisingawareness of employees
and collaboration with othercompanies participating in
the project.

Joining the GHIT Fund

Rating by Credit Rating Agencies
The issuer rating of the H.U. Group by Rating and Investment
Information as of October 1, 2023 was as follows.

DX Stocks 2023

Supporting JCI and the Race to ZeroWe support the Japan Climate
Initiative (JCI)’s call to “join the frontline of the global push fordecarbonization from Japan.” We also
participate through JCI in the Race toZero,*4 which targets net-zerogreenhouse gas emissions by 2050.

Fujirebio Holdings, Inc. joined the Global Health Innovative
Technology Fund (GHIT Fund) in August 2023. It will contribute tosolving global health issues
such as improving accessto healthcare.

*4 An international campaign promoted by the secretariat of the United Nations Framework
Convention on Climate Change (UNFCCC). It calls on business enterprises, local governments,and other organizations worldwide to commit to targeting net-zero greenhouse gas emissions
by 2050 and to begin taking relevant action immediately.

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Contents

Corporate Information (As of March 31, 2023)
Corporate Profile

Share Information

Corporate Name

Listed Stock Market

H.U. Group Holdings, Inc.

Headquarters

Akasaka Intercity AIR
1-8-1 Akasaka, Minato-ku, Tokyo 107-0052, Japan
Tel: +81-3-6279-0801

Representative

Chairman, President and Group CEO
Shigekazu Takeuchi

Established

Tokyo Stock Exchange Prime Market(Securities code: 4544)

Shareholders Based on the Shareholding Percentage
Companies
in JapanNumber of Shares Authorized200,000,000
Number of Shares Issued and Outstanding57,471,867

1.35%

End of Fiscal Year

March 31

0.45%

Securities
companies in Japan

2.58%

Number of Shareholders18,721
One Share Unit100

Treasurystock

Overseas
investors

Individuals andothers in Japan44.76%

14.72%

Financial institutionsin Japan36.13%

December 18, 1950

Capital Stock

Major Shareholders¥9,274 million

Permanent Employees (Consolidated)
5,437Management Structure

Company with three committees

Main Subsidiaries

SRL, Inc., Fujirebio Inc. and Nihon Stery, Inc.

Number of Shares Held(thousands)

Shareholding Ratio (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

10,002.3

17.48

CUSTODY BANK OF JAPAN, LTD. (TRUST ACCOUNT)3,912.3

6.84

J.P. MORGAN CHASE BANK 380684

1,969.1

3.44

J.P. Morgan Bank Luxembourg S.A. 381572

1,717.6

3.00

NIPPON LIFE INSURANCE COMPANY, LTD.

1,538.6

2.69

SSBTC CLIENT OMNIBUS ACCOUNT

1,396.1

2.44

Meiji Yasuda Life Insurance Company

1,272.2

2.22

The Dai-ichi Life Insurance Company, Limited

1,000.4

1.75

STATE STREET LONDON CARE OF STATE STREET BANK AND TRUST,BOSTON SSBTC A/C UK LONDON BRANCH CLIENTS - UNITED KINGDOM

994.2

1.74

STATE STREET BANK AND TRUST COMPANY 505103

922.5

1.61

Name of Shareholders

Notes:1. The Company holds 261,190 shares of treasury stock, which is excluded from the major shareholders listed above. Furthermore, treasury stock does not include the300,778 shares held in the Board Incentive Plan (BIP) trust under the trust-type share-based compensation scheme.
2. Shares owned by The Master Trust Bank of Japan and by Custody Bank of Japan are held in their trust accounts.

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Corporate Information

Main Group Companies and Bases (As of March 31, 2023)• H.U. Group Holdings, Inc.

In-Vitro Diagnostics• Fujirebio France SARL [ 8 ]• Fujirebio Holdings, Inc.

• Fujirebio China Co., Ltd. [ 9 ]Integrated Sales Company• Fujirebio Inc.

• Fluxus, Inc. (U.S.) [ 10 ]• H.U. Frontier, Inc.

• Advanced Life Science Institute, Inc.
• Fujirebio Diagnostics Japan, Inc.

Healthcare-related Services

Lab Testing and its related Services• Fujirebio Diagnostics, Inc. (U.S.) [ 1 ]• Nihon Stery, Inc.

• SRL, Inc.

• Fujirebio US, Inc. [ 1 ]• Care’x, Inc.

• Nihon Rinsho, Inc.

• Fujirebio Diagnostics AB (Sweden) [ 2 ]• GAIA medicare Inc.

• HOKUSHIN Clinical Laboratory, Inc.

• CanAg Diagnostics (Beijing) Co., Ltd. [ 3 ]• SRL Kitakanto Laboratory, Inc.

• Fujirebio Europe N.V. (Belgium) [ 4 ]Other Related Businesses• Tokyo Central Pathology Laboratory, Inc.

• ADx NeuroSciences N.V. (Belgium) [ 4 ]• H.U. Group Research Institute G.K.

• SRL International, Inc.

• Fujirebio Italia S.r.L. [ 5 ]• H.U. Cast, Inc.

• Clinical Network G.K.

• Fujirebio Germany GmBH [ 6 ]• MSF Capital Partners G.K.

• H.U. Wellness, Inc.

• Fujirebio Iberia SL (Spain) [ 7 ]• Ishinban, Inc.
• Japan Institute of Foods Ecology, Inc.
• SRL Medisearch, Inc.
• H.U. Cells, Inc.

2

• KBBM, Inc.
• SRL & Shizuoka Cancer Center Collaborative Laboratories, Inc.
• St. Luke’s SRL Advanced Clinical Research Center, Inc.
• SAPPORO MIRAI LABORATORY Co., Ltd.
• SAPPORO MEDICARRY Co., Ltd.
• MEDISKET CORPORATION• H.U. America, Inc. [ 1 ]• Baylor Miraca Genetics Laboratories, LLC (U.S.) [ 1 ]•S RL (Hong Kong) Limited [ 2 ]• Ping An SRL Medical Laboratories (China) [ 3 ]

7

8

4 6
5

3
3❷
2

9

10

1

1

58

H.U. Group Holdings, Inc.
Akasaka Intercity AIR
1-8-1 Akasaka, Minato-ku, Tokyo 107-0052, Japan
Tel: +81-3-6279-0801

https://www.hugp.com/en/