Annual Report 2019
From April 1, 2018 to March 31, 2019

Contents〇Our History and Strategy ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥1－Good Medical Practice through Good Management ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥2－Our History ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥3－Our Business and Strengths ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥4－Medical Institution Operation Environment and Our Growth Strategy ‥‥‥‥‥‥‥6〇2019 Highlights ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥9－Financial highlights ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥9－Non- Financial highlights ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 12〇President’s Message ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 15－Sogo Medical Holdings Starts Work ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 16－Progress with the Medium-Term Management Plan ‥‥‥‥‥‥‥‥‥‥‥‥‥ 17〇Action Reports ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 19－Developing healthcare malls ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 20－Supporting hospital management ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 23－Creating high-value pharmacies ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 25－To achieve our Vision 2028 ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 28〇CSR Management & Topics ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 30－Human Resources Development ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 31－Promoting Diversity ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 33－Promoting Work-Life Balance ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 36－Promoting Health Management‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 37－Compliance Eﬀorts and Stance ‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥‥ 38--------------------------------------------------------------------------------------------------------------------

The following information is available on the website of Sogo Medical Holdings Co., Ltd.

〇Corporate Governancehttps://www.sogo-medical-hd.co.jp/en/ir/management-policy/governance.html〇Directors & Oﬃcers

https://www.sogo-medical-hd.co.jp/en/proﬁle/oﬃcer.html〇Earnings Announcement

https://www.sogo-medical-hd.co.jp/en/ir/report/presentation.html〇Business Risks

https://www.sogo-medical-hd.co.jp/en/ir/management-policy/risk.html

Our History and Strategy

Good Medical Practice through Good Management

Our History

Our Business and Strengths

Medical Institution Operating Environment and Our Growth Strategy

1Good Medical Practice through Good Management
Medical institutions such as hospitals and clinics need good management to provide high-quality medical care. Providing good medicalcare from the outset, however, also results in good management. Good medical care and good management are therefore both essential

to the provision of eﬃcient, high-quality healthcare. Physicians must have pride and a sense of mission to do everything in their power
for their patients, and it is our mission to provide the institutional support that enables them to focus on their work.

2

Our History
A Good Partner for Medical Institutions
The Sogo Medical Group was founded as a medical equipment specialized leasing company. Over the years, the Group has diversiﬁed
and grown its business by addressing the needs of physicians and by helping medical institutions tackle issues in their business.
Net Sales(¥ billion)

160

Established 1978

140

Late 1980s

Net Sales

120

1990s

2000s

Ordinary Income(¥ billion)

7

FY2013
Net sales reach ¥100 billion

Ordinary Income

6
5

100

4

September 2001
Listed on First Section of Tokyo Stock Exchange

80
60
40

3
2

August 2000
Listed on Second Section of Tokyo Stock Exchange

1

20
0

0
1978 1980

1985

1990

1995

2000

2005

January 2002
100th Sogo
Pharmacy
opened2010
June 2010

300th Sogo
Pharmacy
opened2015
April 2014

500th Sogo
Pharmacy
opened2019
April 2019

700th Sogo
Pharmacy
openedEstablished 1978 ｜ Founded as a medical equipment leasing business
June 1978

Established as Sogo Medical Leasing Co., Ltd., specializing in leasing medical equipment

October 1987
November 1987
May 1988
October 1989
November 1989

Started real estate agency and medical practice succession businesses
Launched TV rental business for hospital patients
Launched dispensing pharmacy business with opening of the ﬁrst Sogo Pharmacy
Company name changed from Sogo Medical Leasing Co., Ltd. to Sogo Medical Co., Ltd.
Started the “Green Members” (now “Succeed Members” ) membership system for medical professionals

Late 1980s

Late 1990s
July 1994
October 1994

2000s

April 2001
October 2001

｜ Business diversiﬁcation and reinforcing the leasing business｜ Shift in focus from clinic start-up support to comprehensive consulting services

Sogo Pharmacies start providing in-home medication guidance
Established Somtech Co., Ltd. to plan, design and build medical facilities｜ Accelerate business expansion through M&A

Acquired all outstanding shares of Orix Media Supply Co., Ltd., a TV rental business serving hospitals and hotels
Started the DtoD system ‒ support for medical practice succession, healthcare coordination and physicians seeking tochange practices
April 2005
Launched hospital management outsourcing services
June 2005
Launched clinic mall startup and operation support services
August 2007
Formed business alliance with Mitsui & Co., Ltd.
November 2011 Established Sogo Care Network Co., Ltd. as a wholly owned Group company to operate fee-based residential nursing homes
Acquired shares of Sun Villa Co., Ltd., a fee-based residential nursing home with long-term care (all outstanding shares
June 2012acquired in May 2014)
Acquired shares of Hokendohjinsha Inc., a healthcare information service company
March 20152016 February: Acquired shares of GM Co., Ltd., a company that carries out medical facility interior construction work
December: Acquired shares of Miyonodai Pharmacy GroupAcquired all outstanding shares of Bunkyo Corporation, a company that operates in-hospital shops and convenience stores
April 2018
Established Sogo Medical Holdings Co., Ltd. and moved to a holding company system
October 2018

3

-1

Our Business and Strengths
Consulting-based total management support for medical businesses
Using a consulting-based approach, Sogo Medical provides total management support for medical businesses to help hospitals andclinics deliver eﬃcient, high-quality healthcare.

We operate a range of businesses that support good medical practice. Our DtoD system helps stimulate local healthcare through physi-

cian referrals, support for medical practice succession and healthcare coordination. We also develop and operate healthcare malls that
address issues in local healthcare provision, establish primary care pharmacies with strong links to local communities, and lease medical equipment to improve patient convenience.

Opening the path to future healthcare
Expertise in linking and supporting healthcare providers

Total support for medical business management
RentalPharmacies

Rental of TV and other systems
backed by reliable maintenancesupportLeasingLong-Term Care

Medical Institutions

Pharmaceutical
Wholesales

Operating residential nursing
homes for the elderly

Patients

Procuring and selling generic
medicines

Healthcare &Prevention

Providing healthcare information
services

In-Hospital Shops
and Restaurants

Operating in-hospital shops,
convenience stores, restaurants,
cafes and other facilities

Hospital
Management
Service

Healthcare
Malls

Healthcare
coordination support

Staﬃng and staﬀ
training

Helping to create high-quality
healthcare and nursing careenvironments

Physicians &Introducing and upgrading the
medical equipment which
medical institutions need

Human Resources

Design & Construction

A nationwide network ofcommunity-focused pharmacies
based on the concept of“healthcare coordination”

DtoD System
Introducing
successors

Career changing support

Management Consulting
Facilities

Funding

Medical facility rental andbrokerage services

Cash ﬂow improvement

4

Information

Information bulletins,
member seminars

Doctor to Doctor (DtoD) system – the driving force of the Group’s business
DtoD supports regional medical care by linking the will among physicians

The DtoD system provides comprehensive support for staﬀ physicians, practitioners and hospitals that face issues in their operations.

The system meets a wide range of needs, such as helping staﬀ physicians change their career identifying physicians who can take overmedical practices that have no successors, referring high-quality physicians to hospitals, and coordinating in new medical practices withpractitioners.

5Medical Institution Operation Environment and
Our Growth Strategy
Medical Institution Operation Environment
With Japan’s society aging at an unparalleled pace worldwide, the Japanese government is aiming to build a framework that provides
integrated support and services for the elderly in their local communities (integrated community care system) by 2025. The goal is tomaintain the dignity and support the autonomy of elderly people by ensuring they continue to live out their lives as independently as
possible in environments familiar to them.

Vision 2028: Completing our original healthcare business model
Under the Group’s Vision 2028* long-term strategy, we aim to complete our Japanese healthcare business model, which supports thecreation of healthcare systems that enable the public to eﬃciently access high-quality healthcare. The Sogo Medical Group aims tocreate a healthcare network that maximize the capabilities of each area of healthcare provision, by coordinating the services ofadvanced acute phase hospitals, acute phase hospitals, recovery phase hospitals, and chronic phase hospitals, as well as healthcaremalls that provide localized healthcare services, and by working with other companies. Developing ideal healthcare malls and providing
management support to hospitals are key elements of that approach. We aim to complete our original healthcare business model bysupporting the functional specialization of hospitals, coordinating with those hospitals, and developing healthcare malls that provide
nursing care, healthcare & prevention and support for daily life.

*We have taken the “Vision 2028” name from the Medium-Term Management Plan (April 2017 ‒ March 2020) that was formulated by Sogo
Medical Co., Ltd. before Sogo Medical Holdings Co., Ltd. was established.

Completing our Original Healthcare Business Modelto Support an Integrated Community Care System

Hospital Management Support
Advanced acutecare hospital

Ideal Healthcare Mall

Existing healthcare mall

Acute care
hospital

Treatment

Hospital bed reorganization

Recovery phase
hospital

Pharmacy

Nursing care

Residential
life

Chronic care
hospital

Daily life support(Source) Prepared by the Sogo Medical Group based on data from the Ministry of Health, Labour and Welfare

6

Healthcare &prevention

Medium-Term Management Plan: Action 2020
Action 2020, our current three-year business plan ending in FY2019, is designed to close the gap with the objectives of Vision 2028, ourlong-term strategy ending in FY2027.

Completing our original healthcare business model is the key theme of Action 2020.

Objectives for the Fiscal Year Ending March 31, 2020
Development of Healthcare Malls

Social infrastructure as core facilities for medical treatment, nursing care, and support for daily life

Aiming for 200 Locations

Hospital Management Support

Support functional specialization and coordination to build an integrated community care system

Aiming for 37 Hospital Management Support Contracts

Create High-Value Pharmacies

Support an integrated community care system with pharmacies that serve as general healthcare stations

Organic Growth*1 of 2.3 Million Prescriptions (20%)

To Achieve Vision 2028

Enhance/strengthen existing businesses and increase scope of health-related businesses

Exploit New Areas, Leverage Sharing Domestic/International Expertise7

Management targets for FY2019, ending March 2020
(final year of Medium-Term Management Plan)
Cash ﬂow

Net sales ¥160 billion (organic)

Investment in growth¥20 billion allocated for capex over plan’ s three years

Financial strategy

Total Shareholder Returns

EBITDA margin*2 9% or higher

Active use of separate budget for M&A and business tie-ups

Net D/E ratio*3 of approximately 0.5x

If needed, interest-bearing debt will be used to fund the Group’s growth strategy, and the
net D/E ratio will be set at roughly 1.0x

Dividend Payout Ratio Maintained at minimum 20%
Maintaining stable, continuous dividend payouts*1 Organic growth: Internal growth not dependent on M&A activity*2 EBITDA: Earnings Before Taxes, Depreciation and Amortization of goodwill; EBITDA margin: EBITDA ÷ net sales*3 Net debt/equity ratio: Net interest-bearing debt (interest-bearing debt ‒ cash and deposits) ÷ shareholders’ equity; interest-bearing
debt is debt recorded on the balance sheet including lease obligations and accounts payable ‒ installment purchase8

2019 highlights

Financial highlights
Net Sales
Others 0.7%

¥144.6 billion

Breakdownof
net sales

Up 6.8% YoY

Net sales totaled ¥144.6 billion, up 6.8% year on year, supported
by sales from Bunkyo Co., Ltd. which became a Group company,

and by higher sales from the consulting, rental and leasing and80.2

installment sales businesses in the Medical Institution Manage-

86.6(¥ billion)

Medical Institution Management Support 25.8%
Pharmacies 73.5%

103.3

107.9

120.7 122.2

144.6

135.4

ment Support Segment.

2012 2013 2014 2015 2016 2017 2018 2019

Operating Income¥5.4 billion

Operating income

Operating margin (%)

Operating margin 3.7%

4.8

Down 24.7% YoY

Revisions to drug prices and dispensing fees in April 2018 had anegative impact on the Group and its chain of pharmacies. The

6.0

Group worked to ﬁnd savings in selling, general and administra-

tive expenses by improving business eﬃciency and optimizing
costs, but that was insuﬃcient to fully oﬀset the impact of therevisions, leading to a decline in operating income year on year.

4.3

5.0

5.0

5.0

4.9

4.6

6.0

5.0

6.2

5.1

7.1

(¥ billion)

5.4

5.3

3.7

2012 2013 2014 2015 2016 2017 2018 20199

Net Income Attributable to Owners of the Parent¥3,246 million
Down 23.5% YoY

3,779

FY2018 net income attributable to owners of the parent declined
year on year, as the Group was unable to oﬀset the negative

2,504 2,532

impact of revisions to drug prices and dispensing fees in the2,856 2,774

Pharmacies segment.

4,243(¥ million)

3,246

2,318

2012 2013 2014 2015 2016 2017 2018 2019

Total Assets¥93.5 billion(¥ billion)

Total assets

Equity ratio (%)

Equity ratio 41.0%
Up 4.2% YoY

The equity ratio continues to trend near the 40% level.

53.1
36.7

57.1
37.8

66.9

35.7

69.8

37.7

74.6

39.5

86.7

37.6

93.5
89.7

40.4 41.0

2012 2013 2014 2015 2016 2017 2018 2019

Net Assets¥38.6 billion(¥ billion)

Net assets
ROE (%)

Up 5.9% YoY
ROE 8.7%

Net assets continue to increase steadily, supported by stable

19.5

proﬁt growth. Return on equity (ROE) has trended near 12% in

13.6

recent years, but dropped to 8.7% in FY2018.

21.6
12.3

23.9

12.6

26.5

11.0

29.6

8.3

32.8

12.2

36.5

12.3

38.6

8.7

2012 2013 2014 2015 2016 2017 2018 201910

Cash Dividends per Share
2.5

¥27.5

(commemorative
dividend)
Cash dividends per share
Dividend payout ratio (%)

Dividend Payout Ratio 25.4%

The Group’s basic policy on shareholder returns is to maintainthe dividend payout ratio at 20%. We recognize the need to raise

17.5

the dividend payout ratio further, but as the Group is still in a

growth phase, we intend to prioritize funds for investment in

20.2

growth to expand the business, while also maintaining suﬃcient

20
22.8

20

20.2

20

20.8

22.5

30

25

29.1
19.8

(¥)

27.5

21.2

25.4

internal reserves to ensure a robust ﬁnancial base. We believe

investing in growth will increase the Group’s corporate value,2012 2013 2014 2015 2016 2017 2018 2019

beneﬁting shareholders in the form of a higher share price.

*The Company conducted a 2-for-1 stock split on April 1, 2015
and a 2-for-1 stock split on April 1, 2018. Per-share data has beenadjusted retroactively to reﬂect the stock splits.

*The annual dividend for FY2017 includes a year-end commemorative dividend of ¥5.00 (¥2.50 after stock split).

11Non- Financial highlights

DtoD Participating Physicians(physicians seeking to change careers)

79,787 (up from 74,898 in FY2017)(No. of physicians)

DtoD is a proprietary system provided via 28 Sogo Medical oﬃces nation-

wide that creates ideal matches between outstanding personnel andmedical institutions. The system meets a wide range of needs, such as

helping staﬀ physicians transfer or open a practice, identifying physi-

48,43056,50562,42969,15974,89879,787

cians to take over medical practices that have no successors, referring

high-quality physicians to hospitals, and coordinating healthcare provision with independent medical practices. Our aim is to support sustainable, vibrant regional medical care provision by harnessing personnel
and social resources.

2014

2015

2016

2017

2018

2019

Succeed Members

1,728 (up from 1,680 in FY2017)

Signing up as a Succeed Member gives medical institutions reliable access to the latest information in the industry. By providing support
for hospital and medical practice management from various angles, including human resources, facilities, funding and information, we
aim to develop new services and win new orders for consulting services to expand the customer base.

12

Pharmacists

2,628 (up from 2,505 in FY2017)(No. of pharmacists)

Attracting and training pharmacists is extremely important tosupport the development of healthcare malls and increase thenumber of pharmacies. The Group continues to run an internshipprogram for pharmacy students and provide a wide range of

1,332

training systems to attract and train pharmacists, while also

1,768

1,913

2,505

2,628

2017

2018

2019

674

687

698

2017

2018

2019

2,364

working to raise the skills of its pharmacists to address needs foradvanced pharmaceutical management.

2014

2015

2016

Pharmacies

698 locations (up from 687 in FY2017)(No. of locations)

We have worked to develop our network of pharmacies as “general healthcare stations” with strong links to local communi-

538

493

ties. We have actively enhanced the capabilities of pharmacies by576

helping our pharmacists acquire specialist skills and by providing
support for healthy lifestyles.

2014

2015

2016

Health Support Pharmacies

128 locations (up from 89 in FY2017)

With Health Support Pharmacies, our goal is to create locations that meet certain criteria set by the Minister of Health, Labour andWelfare for pharmacist qualiﬁcations, internal facilities and accessible opening times. The number of the Group’s Healthcare Support
Pharmacies is growing steadily, reﬂecting our eﬀorts to create pharmacies with strong links to local communities and to improvecapabilities of family pharmacies.

Trace Reports Providing Feedback to Physicians

126,564 (up from 117,000 in FY2017)

The Group’s pharmacies share trace reports with medical institutions to provide feedback from patients, such as medication information. Our aim is to improve the quality of patient care through cooperation with medical institutions.

13Registered Users of HealthCare Note® (Electronic Medicine Scheduler)

121,627 (up from 82,523 in FY2017)

HealthCare Note® is a smartphone-based electronic medicine scheduling system. The Group is encouraging patients to install the app, as
it improves convenience by reducing wait times and oﬀering other beneﬁts for patients, while also allowing pharmacists to check medication histories beforehand to improve prescription accuracy.

*HealthCare Note® is a registered trademark of PHC Holdings Corporation.

14

President’s Message

Starting Sogo Medical Holdings

Progress with the Medium-Term Management Plan

15

Starting Sogo Medical Holdings
The Group moved to a holding company structure on October 1, 2018 with the establishment of Sogo Medical Holdings Co., Ltd. We

believe a holding company structure provides the best framework for Sogo Medical Co., Ltd., which marked its 40th anniversary last year,
to rapidly achieve the goals in Vision 2028 and increase corporate value, as well as generate sustained growth by expanding existing
businesses and creating new ones.

Japan’s rapidly aging society with a low birthrate and rising healthcare costs mean the healthcare sector is under growing pressure toprovide highly eﬃcient services. Against that backdrop, medical institutions are seeing dramatic changes in their operating environment amid eﬀorts to create an integrated community care system*, including measures to promote medical function specialization,
improvement and coordination, and moves to upgrade in-home health care provision.

“Good medical practice through good management” has been our motto since the Group was founded. Guided by that approach, wehave provided consulting services that have improved the management of medical institutions. That expertise and our network of physicians and medical institutions are the Sogo Medical Group’s unique strengths. Supported by the new corporate structure, we will accel-

erate eﬀorts to develop and enhance existing businesses and actively utilize M&A and alliances in order to expand our operations andcreate new businesses.

Going forward, we will continue to optimally allocate management resources to maximize synergies and seek out new challenges toincrease the corporate value of the whole Group.

*Integrated community care system: An integrated system providing housing, healthcare, nursing care, prevention, and support for daily life to help

the elderly live out their lives as independently as possible in environments familiar to them, even if they become heavily dependent on nursing care.
The Ministry of Health, Labour and Welfare (MHLW) aims to complete the system by 2025, when Japan’s baby boomers become 75 or older, bypromoting specialization and coordination in regional healthcare and by improving home healthcare.

Transition to Holding Company System ‒ Background and Objectives

Business Environment

Societal Demands□ Aging population/□ Stronger corporate governancerising public healthcare costs□ Creation of integrated community
care system

Vision 2028

Reinforce management oversightbusiness model to support the integrated
community care system

functions under holding company system

Complete the Original healthcare

ActionActionActionSeparate management and executive

1.

Strengthen Group management strategy capabilities
and business execution framework

3.

Cultivate the next generation business leaders

2.

Expand network of strategic partners

Transition to holding company system will

maximize corporate value and generate sustained growth16

Progress with the Medium-Term Management PlanIn FY2018, the second year of our Action 2020 Medium-Term Management Plan, we continued to focus on four priority initiatives: devel-

opment of healthcare malls, hospital management support, create high-value pharmacies, and achieve our Vision 2028 by enhancing
and strengthening existing businesses and by expanding into health-related businesses.

By drawing on the capabilities of all our employees, we aim to achieve the objectives for the ﬁscal year ending March 31, 2020 in theplan’s ﬁnal year.

- See the Action Reports on the following pages for details about concrete initiatives in FY2018.

(1) Development of healthcare malls
The Group is developing healthcare malls to provide reliable, high-value-added functions and services to medical institutions andpatients. Another goal is to use the malls to maximize the Group’s “stock income” (continuous income stream) centered on pharmacies,
by attracting as many clinics as possible and providing a location for integrated medical services. Developing healthcare malls is
positioned as the priority initiative in our Medium-Term Management Plan.

In the previous ﬁscal year, we opened the Akasaka Toranomon Clinic in Tokyo to support specialization and coordination of medical
treatment provided by an advanced acute care medical facility.

In the ﬁscal year under review (November 2018), we opened MEDICAL MALL MACHINOMA OMORI in the Machinoma retail facility, the ﬁrst
in a series of mid-size suburban shopping centers that Mitsubishi Corporation Urban Development, Inc. plans to develop. MEDICAL MALL

MACHINOMA OMORI is a “community-based healthcare mall” that brings together a conventional supermarket, nursing care consultation oﬃce, ﬁtness center, childcare center and community space in a single location.

Going forward, we will draw on the Group’s strengths ‒ our DtoD system, synergies with pharmacies and our expertise in supporting thestartup of new clinics ‒ to develop healthcare malls that contribute to the creation of an integrated community care system.

(2) Hospital Management Support
In 2018, the Japanese government launched its 7th Treatment Plan in conjunction with simultaneous revisions to healthcare and welfare
systems. The government has positioned the plan as a key part of eﬀorts to realize its healthcare model by 2025. Prior to that, we

responded to the government’s hospital bed function reporting system, launched in 2014 as a preliminary step to the 7th Treatment
Plan, and provided consulting services ‒ one of our strengths- to specialize and coordinate the hospital function considering the diﬀerence in medical condition each community has, and generated synergies with existing businesses.

In FY2018, we secured ﬁve new clients for our hospital management support services, taking the total number of clients to 14.

We also helped medical institutions to accommodate the function as a medical institution positioned in the integrated community caresystem, and converted a facility to where elderly patients can receive medical care and support over a long time (kaigoiryoin).

We expect the reorganization of hospital beds to support continued demand for our consulting services. We will therefore continue tofocus on attracting high-quality personnel and on cultivating management consultants.

17

(3) Create high-value pharmacies
Revisions to dispensing fees and drug prices in 2018 had a negative impact on the Group’s pharmacies. However, we responded torevisions to dispensing technical fees by working to secure prescription demand from a wider area, oﬀering in-home prescription

services and strategically redeploying staﬀ. During FY2018, the number of prescriptions ﬁlled by Group pharmacies totaled 12,487,000,
up 1.9% year on year, and the number of pharmacies as of March 31, 2019 was 698, including 17 newly opened locations. Going forward,
we plan to expand our pharmacy network in conjunction with healthcare mall development, hospital management support, medical

practice succession and the separation of drug prescribing and dispensing functions. We will also actively enhance the quality of ourpharmacies in line with MHLW’s “vision for patient-centered pharmacies” by introducing healthcare support functions and advanced

pharmaceutical management functions, along with other initiatives such as cafés for dementia suﬀerers and remote medication consul-

tation services. Our goal is to upgrade the functions of our pharmacies to create “general healthcare stations” that support the integrated community care system.

(4) To achieve our Vision 2028
Enhance and strengthen existing businesses and expand into health-related businesses

To realize the objectives of Vision 2028, we are looking closely at business opportunities overseas. Speciﬁcally, we are conducting

research and development with a view to overseas expansion and studying from leading case examples which are drawing attention in
the oversea markets. In the ﬁscal year under review, we researched and studied the healthcare environment in China, which followed afact-ﬁnding trip to the US last year. In China, where the market for healthcare services continues to growth, we launched our Japaneseclinic startup business model in May 2019, backed by our DtoD system and our track record of providing support for the opening of morethan 3,000 medical practices in Japan.

Going forward, we will continue to look for opportunities to deploy our unique businesses in overseas markets.

Helping to build a better society through good medical practice
Since Sogo Medical was founded, our consulting-based business activities have been aimed at helping medical institutions overcome

management challenges and resolving social issues related to local healthcare provision, guided by our motto, “good medical practicethrough good management.”

Motivated by pride and a strong sense of mission, every Sogo Medical Group employee will work highly eﬃciently to rapidly achieve theobjectives of our Action 2020 Medium-Term Management Plan and Vision 2028 long-term strategy. By helping to build a better society
through good medical practice, we aim to become a valued company that is trusted by all stakeholders and that never lets them down.

18Action Reports

Developing healthcare malls

Supporting hospital management

Creating high-value pharmacies

To achieve our Vision 2028

19

Developing healthcare malls
Our vision: Develop multi-service healthcare malls that act as
public infrastructure, providing key services such as medical
treatment, nursing care and support for daily life.
Sogo Medical Holding is actively developing healthcare malls across Japan to support the development of communities through health-care. Under our Action 2020 Medium-Term Management Plan, the development of healthcare malls is also part of our eﬀorts to build aplatform for regional healthcare networks. To address its aging society, Japan is aiming to build an integrated community care system(see below for more details). Our ideal healthcare malls are designed to support hospital management and help the government realize
its vision for an integrated community care system.

Japan’ s vision for an integrated community care system
Japan is building an integrated system that provides housing, healthcare, nursing care, prevention, and support for daily life to help theelderly live out their lives as independently as possible in environments familiar to them, even if they become heavily dependent on

nursing care. MHLW aims to complete the system by 2025, when Japan’s baby boomers are 75 or older. Municipal and prefectural governments, which are responsible for the local public health insurance system, need to create community care systems tailored to conditionsin their respective areas based on autonomy and independence.

Aiming to create healthcare malls as public infrastructure
MHLW's vision for an integrated community care system is based on the assumption that patients should be able to access the services
they need within 30 minutes in the areas where they live (MHLW uses junior high school catchment areas).

Based on those criteria, Sogo Medical aims to develop healthcare malls that provide multiple services such as housing, healthcare,nursing care, prevention and support for daily life, as well as traditional hospital and pharmacy services, for people living in local areas.
Completing our Original Healthcare Business Modelto Support an Integrated Community Care System

Hospital Management Service
Advanced acutephase hospital

Ideal Healthcare Mall

Existing healthcare mall

Acute phase
hospital

Treatment

Hospital bed reorganization

Recovery phase
hospital(Source) Prepared by the Sogo Medical Group
based on data from the Ministry of Health,Labour and Welfare

Pharmacy

Nursing care

Residential
life

Chronic phase
hospital

Daily life support

Healthcare &prevention

Many existing healthcare malls have only hospital and pharmacy functions.
Our ideal healthcare mall acts as public infrastructure, providing a broad
range of services such as nursing care and support for daily life.

20

Progress: Initiatives in FY2018
We have developed a total of 109 healthcare malls nationwide as centers
for healthcare and nursing care services.

Healthcare malls not only increase convenience for patients, they also

increase the eﬃciency of healthcare provision by linking up physicians andsupport the provision of home healthcare by bringing together diﬀerent medical professions. Sogo Medical continues to develop healthcare malls. As of
March 31, 2019, the Group had opened a total of 109 locations. We plan tocontinue actively developing healthcare malls as centers providing healthcare
and nursing care services.

21

Case study (1)MEDICAL MALL MACHINOMA OMORIIn November 2018, we opened MEDICAL MALL MACHINOMA OMORI inside Machinoma Omori, a retail facility developed by Mitsubishi
Corporation Urban Development, Inc. (MCUD) in Ota Ward, Tokyo. The mall is close to a university hospital, so there is access to acutecare if required. However, we decided to develop the mall due to a high need for a clinic with close links to local residents and that coordinates treatment with the university hospital.

Machinoma Omori is a retail facility focused on local residents. It provides everyday convenience with access to shopping and services,
facilitates community building through an event space for joint events with Ota Ward, a supermarket and childcare facility, and oﬀers
health and prevention functions with a ﬁtness club. Sogo Medical has opened internal medicine, pediatric and ear, nose and throat

clinics and a Sogo Pharmacy in the shopping center. The facility also has an oﬃce providing healthcare advice and support for in-homenursing care, making MEDICAL MALL MACHINOMA OMORI our ﬁrst-ever “community healthcare mall” with the ability to provide thefull-range of healthcare, nursing care, and health and prevention services.

Case study (2)Akasaka Toranomon Clinic
The Akasaka Toranomon Clinic has helped a local hospital specialize its medical treatment services.

Toranomon Hospital provides advanced acute care, but it also served many

patients with chronic and mild conditions, which led to overcrowding in outpatient waiting rooms. To address that issue, Sogo Medical opened Akasaka

Toranomon Clinic next to the hospital to provide localized healthcare services
for patients with non-urgent conditions. The clinic has 11 medical depart-ments staﬀed by roughly 10 highly experienced physicians who stepped downfrom positions at Toranomon Hospital. The clinic works closely with the hospital and is attracting attention as a rare example of how hospitals can successfully achieve functional specialization.

22

Supporting hospital management
Our vision: Support hospital specialization and coordination aspart of an integrated community care system
There is growing demand from hospitals for consulting services to help them realize the MHLW’s integrated community care system. In
the ﬁscal year under review, we started providing management support to ﬁve hospitals. We provide a comprehensive package of
support, which includes exploring the role hospitals will need to play amid expected changes in their local healthcare environment andhelping them overcome any issues that stand in the way of that role, as well as providing support to improve hospital operations.

23

Progress: Initiatives in FY2018
Providing management support to 14 hospitals so physicians can focus on
patients

We are seeing rising demand from hospitals for consulting services to help

them realize the MHLW’s vision for an integrated community care system. As of

14

March 31, 2019, we were providing management support to 14 hospitals. We

provide a comprehensive package of support, which includes exploring the9role hospitals will need to play amid expected changes in their local healthcare environment and helping them overcome any issues that stand in theway of that role, as well as providing support to improve hospital operations.

2015/3

5

5

16/3

17/3

Case Study (1)Clinic A
Opening a new pharmacy led to a project to provide comprehensive
management support
Working with the clinic to develop a future business plan that includes risk
management

We have been providing management support to clinic A since opening apharmacy next to the clinic. Following recent revisions to medical treatment

fees, we are reviewing the management company’s entire earnings structureand developing a future business plan. Our support package covers a wide
range of areas, such as management consulting (contracted management by

seconded staﬀs), internal construction work on the clinic, equipment leasing
and rental, and facility leasing.

Case Study (2)Hospital B (rehabilitation and accommodation facility for the elderly)
Supporting the hospital’s switch to a facility providing long-term care andaccommodation for the elderly to meet high demand
Providing full support – from hospital bed realignment costing to internal
construction work

Japan’s aging society means there is now an oversupply of acute care beds but
an increasingly serious shortage of chronic care and rehabilitation beds.

Hospital B has made the decision to become a rehabilitation and accommoda-

tion facility for the elderly (kaigoiryoin) to provide long-term care and accommodation. We provided comprehensive support by costing the businessmodel, negotiating with local authorities, repurposing the facility and procuring the necessary equipment.

24

Target37

Number of management
support projects

18/3

19/3

20/3
(Target)Creating high-value pharmacies
Our vision: Support the integrated community care system by
upgrading the functions of our pharmacies to create “general
healthcare stations”
For some time, we have been enhancing the role of our pharmacists and pharmacies to create “general healthcare stations.” We havecreated a nationwide network of pharmacies with close links to local communities, aiming to provide support for all people seeking tolead healthy lives, in addition to conventional dispensing services. Our vision for pharmacists and pharmacies to support “general
healthcare stations” also aligns with MHLW’s concept of primary care pharmacists and pharmacies with healthcare support functions

and advanced pharmaceutical management functions, as set out in its “vision for patient-centered pharmacies.” In the future, we see our“general healthcare station” pharmacies becoming key components in MHLW's integrated community care system by delivering comprehensive support for housing, healthcare, nursing care, prevention and daily life.

MHLW’ s “vision for patient-centered pharmacies”
In 2015, the Ministry of Health, Labour and Welfare (MHLW) released its “vision for patient-centered pharmacies,” aiming to spur a shift

to “family pharmacists and pharmacies.” The vision was developed in response to a range of issues, such as over-prescription of somemedications and sharply rising national healthcare expenses, which was related to widespread use of dispensing pharmacies locatednear hospitals. The main objective of MHLW’s vision is to improve safety and convenience for patients and control healthcare expenses.
MHLW’s Vision for Patient-Centered Pharmacies

Health support pharmacy

Figures in brackets are actual results for the previous period.

Health support function

Advanced pharmaceutical management function

Health support pharmacy

No. of specialized
pharmacists

No. of pharmacies 128 (89 pharmacies)

Number of pharmacists who have completed training
891 (641 pharmacists)
Health events at pharmacies

Total

Health events at stores

Outreach-type health events

Number of
eventsNumber ofparticipants

1,544

8,072

1,824

280

*Internal certiﬁcation

87 pharmacists(69 pharmacists)

JASPO(Japanese Society of Pharmaceutical Oncology)

Pharmacists accredited to provide
outpatient cancer treatment
No. of accredited health insurance
dispensing pharmacy pharmacists(Cancer, home care, pediatrics,
liver, diabetes, etc.)

29,8304 out of 32*As of April 30, 2018

21,758

Family pharmacists/pharmacies

Centralize and continuously monitor
information on medication

24-hour service and home visits

Number of letters of consent forfamily pharmacists

Ratio of pharmacies oﬀeringhome visits

61,985cases (55,959 cases)

Collaboration with medical institutions

No. of calculations for provision fees,
including information on medication

89% (86%)(excluding somegroup companies)

No. of fee calculations foroutpatient support for taking medication

1,245cases (438 cases)

322cases (203 cases)

25

Progress: Initiatives in FY2018
Creating a nationwide network of pharmacies with close links to local
communities based on medical care coordination.

The Group and its chain of pharmacies continued to face a tough operating

environment in FY2018 after revisions to dispensing fees and drug prices in

April 2018 that cut basic dispensing fees at pharmacies located near hospitals.

12,276

10,814

10,0399,097

Target13,114

12,487

Number ofprescriptions

Those pharmacies tend to receive a high ratio of prescriptions from the particular hospital. Against that backdrop, we pushed ahead with measures tocreate “general healthcare station” pharmacies with close links to local
communities, leading to steady growth in prescription volume.

2015/3

16/3

17/3

18/3

19/3

20/3
(Target)Case Study
1. Initiatives to increase prescription volume■ Healthcare mall development : Open highly proﬁtable pharmacies as part of healthcare mall development■ Support for medical practice succession and startups : Open pharmacies that help to sustain regional medical care
■ Management support for hospitals : Open large pharmacies in collaboration with client hospitals■ Medical care coordination : Open pharmacies as part of the shift away from in-hospital drug dispensing (separation of prescribing

and dispensing functions)

2. Advanced initiative (1): Joint project with Leifras Co., Ltd. (METI-backed project)
Project to drive fun community-based health programs that are not dependent on public insurance

Sogo Medical has teamed up with Leifras to roll out health programs for the elderly (aged 65-74). The programs, which are run by local

pharmacists, nutritionists and ﬁtness instructors, are designed to help the elderly lead healthy lives without relying on public insurance
by giving them a sustainable and enjoyable way of staying ﬁt and eating properly.

3. Advanced initiative (2): Remote medication consultation services
Business project is based in the Fukuoka City national strategic
special zone

Regulations in Japan stipulate that medication consultation services
must be provided face-to-face between the pharmacist and patient.
However, in national strategic special zones, patients are allowed toremotely receive medical examinations from physicians and medication guidance from pharmacists, and receive deliveries of medication

Patient

tient ofiﬁes pa(3) Not(4) Onl(6) Not

ine mediﬁcation

iptionprescricationmedic(5) Medication dispatchedPhysicianClinicine

medic(1) Tele(2) Writes prescription

consultationation has beenreceived

Pharmacist
Pharmacy

at home, provided certain conditions are met.

In March 2019, Sogo Medical launched its ﬁrst remote medication consultation service in the Fukuoka City national strategic specialzone. Through the project, we plan to strengthen our in-home healthcare system and improve convenience for users, as well as provide
new value through a platform and service menu that allows users to stay in the comfort and familiar surroundings of their own homes
while receiving medical care.

26

4. Cafés for dementia sufferers
In December 2018, we opened Smile Café @ Sogo at dispensing pharmacies inFukuoka City to support dementia suﬀerers and their families, raise awarenessof dementia among the local community and contribute to a rapid response topeople diagnosed with the condition. We are developing the cafés with Fukuoka City’s dementia café startup support team, part of its “Dementia-friendly
City Project,” as the only pharmacy company participating in the project.

Staﬀ speak to visitors at the ﬁrst dementia café
session (Sogo Pharmacy Tenjin chuo shop)

5. Working with LOTTE Co., Ltd. to tackle the issue of oral frailty
On August 6, 2018, with support from LOTTE Co., Ltd., we started eﬀorts to raiseawareness of oral frailty and promote preventative measures via 37 locations in

Kyushu, including Sogo Pharmacies. Drawing on LOTTE’s expertise and knowledge from research into mastication, our pharmacists explain the conditionand provide advice using testing tools. We plan to gradually roll out the
program nationwide.

Mastication testing gum

6. Sogo Medical joins Osaka Prefecture project to create healthy lifestyle support platform
Sogo Medical is participating in Osaka Prefecture’ s model project to create a platform for healthy lifestyles, called “Osaka Kenkatsu

Mileage A-smile,” which launched on January 21, 2019. Our pharmacists provide health consultations as part of the project. Osaka

Prefecture’ s goal is to extend healthy life expectancy and control healthcare expenses through the A-smile smartphone app, which isdesigned to increase understanding of health issues and keep users motivated to lead healthy lives.

27

To achieve our Vision 2028
Our vision: Enhance and strengthen existing businesses andexpand into health-related businesses”
To achieve the objectives of Vision 2028 in FY2027, which marks the Group’s 50th anniversary, and to complete our original healthcare
business model to support the integrated community care system, we need to build the foundations for regional healthcare networks.

Speciﬁcally, we will have to strengthen and add new functions to existing businesses and expand our reach into health-related businesses.

Progress: Initiatives in FY2018
Expanding our reach into health-related businesses

In FY2018, Bunkyo Co., Ltd. became a Group subsidiary, increasing the scale ofour business transactions with mid-size hospitals (at least 400 beds), which isa major market for health-related businesses. Going forward, we plan toallocate the Group’s business resources to strategic ﬁelds, provide added
value to healthcare malls and expand our role in areas not covered by the
public healthcare insurance system.

28

Case Study
Examples of synergies with Bunkyo
Packaged service contracts that improve satisfaction and eliminate shortages in hospitals

Bunkyo Co., Ltd. operates in-hospital kiosk, convenience store, restaurant and TV rental businesses at roughly 100 hospitals. Bunkyo is aleading company providing a package of services that improve the quality of hospital stays.

In one case, Sogo Medical was providing rental TV services to a hospital in Bunkyo’s market. We learned that the hospital was notsatisﬁed with the quality of its onsite kiosks. Acting on that information, we developed a joint business proposal for a package of services
including TV rental, kiosks, rental service of necessary items for hospital stay and onsite vending machines. The packaged service

contract helped the hospital to improve satisfaction and eliminate shortages.

29CSR Management & Topics
Our CSR activities have the same aim as our business activities—working to build a better
society through good medical practice. We work hard to develop valuable human resources
who can make good medical practice and a better society a reality.

Four Principal Elements of CSR
1. We shall understand and share our management principles and fulfill our corporate mission through our work.
2. We shall provide services that surpass customer expectations.
3. We shall create an environment in which employees feel secure and derive fulfillment from their work.
4. As a corporate member of society, we shall be committed to compliance and earn the trust of customers andother stakeholders.
The Sogo Medical Group’s CSR activities have the same aim as its business activities—to build a better society through good medical

practice. Our job is to support good medical practice, which is connected to the development of society and improving the lives of as
many people as possible.

By supporting good medical practice in the future, we aim to fulﬁll our social mission as a company.

CSR: Corporate Social Responsibility

Human Resources Development

Promoting Diversity

Promoting Work-Life Balance

Promoting Health Management

Compliance Eﬀorts and Stance30

Human Resources Development
Targeting continuous development of human resources, we are adopting and implementing a graded training structure tailored to

employees’ growth and roles, including graded programs and executive development programs. Our management principles are thefoundation of every training program, and through these programs we are working to realize the characteristics that are needed in each
employee.

1. PPI Internal Certification
PPI* is an internal certiﬁcation system designed to gradually raise the capabilities of human resources in areas such as clinic start-up
support, staﬃng pharmacy management, and equipment lease and rental.

For example, in healthcare mall development, one of the key strategies of the current Medium-Term Management Plan, we are aiming to
upgrade the Group’s capabilities by raising the Start-up Support PPI skill level of each employee.
*PPI: Practice Process Innovation

31

2. Gradable OJT Educational System (GOES) for Pharmacists
As part of MHLW’s “vision for patient-centered pharmacies,” pharmacists will need the ability to address needs for advanced pharmaceutical management and provide in-home care services. The Sogo Medical Group has established an independent on-the-job training
system to help pharmacists fully utilize their skills.

Developing instructors and specialist pharmacists
Sogo Medical is a pioneer in specialist education and training for pharmacists.In 2011, we launched an internal program to certify
pharmacists specialized in cancer and diabetes, and in 2016 we added a program for pharmacists specialized in home care.
We aim to meet a wide range of community needs by enhancing the specialist capabilities of our pharmacists.

32

Promoting diversity
The purpose of the Group's eﬀorts to promote diversity is to realize its Mission Statement through teamwork, supported by employees

working together to fulﬁll their potential while actively utilizing personnel systems to achieve their personal career visions, within thecontext of Our Pledge, which is the Group’s corporate philosophy, and our Mission Statement and Corporate Credo.

We have established the Diversity Promotion Group in the Group Personnel Division to lead eﬀorts to promote diversity across theGroup. In addition to eﬀorts to empower female employees and reform work practices, the Group is rapidly implementing a broad rangeof measures to harness the skills of diverse human resources, including people with disabilities and senior citizens.

Key diversity promotion measures
Empowering female employees
Sogo Medical awarded highest grade of “Eruboshi” certification
On June 29, 2018, Group company Sogo Medical Co., Ltd. received grade 3 accreditation under the “Act on
Promotion of Women’s Participation and Advancement in the Workplace” (Women’s Activities PromotionAct), also known as “Eruboshi” certiﬁcation. Grade 3 is the highest level of accreditation.

Eruboshi accreditation is awarded by the Minister of Health, Labour and Welfare to companies that haveformulated and ﬁled action plans for promoting women’s participation in the workplace and that also
demonstrate excellence in implementing related measures.

The company previously received grade 2 certiﬁcation on September 28, 2017.

Initiatives to empower women in the workplace●Job transfer system

In FY2013, we launched an annual job transfer system that enables female employees to convert from clerical positions to managerial
positions, where there are more opportunities to advance their careers. Since FY2013, the system has been implemented six times.
Number of employees converting roles: 32 (including 29 women)●Leadership training program for female employees

This annual program was launched in FY2015 to foster potential female

leaders by helping them acquire the necessary mindset and skills for leadership positions and to support the development of clear life plans. Since
FY2015, the program has been run four times.
Total number of participants: 58

33

●Seminar on women’s participation and advancement in the workplace

Launched in 2016, this annual seminar aims to deepen understanding about

eﬀorts to promote diversity by encouraging people managerial positions to think

about and actively support women’ s participation in the workplace in order todevelop clear career paths for female employees. The seminar has been held
three times since 2016.

Total number of participants: 125●Smile☆Kids Temporary nursery for employees taking in-house exams

In 2018, to ensure equal opportunities for female employees seeking promotion

and in-house accreditation, we opened a temporary nursery called Smile Kids tomake it easier for employees raising children to participate in internal training
courses and exams.

Promoting job opportunities for people with disabilities
The Group aims to be “a valued organization that welcomes all people.” Guiding by that thinking, we are creating workplaces where everybody, including people with disabilities, can maximize their strengths and potential. Sogo Medical Co., Ltd. has established a specialist
Operational Support Group that coordinates with other areas of the Sogo Medical Group to actively hire people with disabilities.

Corporate network (SKC Network) to create job opportunities for people with disabilities
In April 2017, we launched SKC Network as an organization for companies to learn and share information
about initiatives to hire and retain people with disabilities in their local communities.

34

Work duties tailored to levels of disability●Medication notebooks (attaching covers)●Production of ID cards, business cards, oﬃcial seals and other items for Group employees●Cleaning duties at head oﬃce, adjacent pharmacies and the “Kakeru” training center●Head oﬃce mail sorting, document printing and binding, delivery to internal and external recipients, etc.
Other internal and external initiatives and third-party evaluation●Contract to run the Fukuoka Labor Bureau model program to promote recruitment of people with intellectual disabilities (from2014)●Awarded the FY2015 Prize of Excellence in Improving Workplace Conditions for the Disabled (presented by the Japan Organization for
Employment of the Elderly, Persons with Disabilities and Job Seekers)

35

Promoting work-life balance
Creating workplaces where employees can flourish and growWe are helping employees to balance their work and life commitments, because we believe that as employees grow, the Group grows
with them. In 2017, senior management announced its commitment to promote diversity and normalize working hours. That was

followed by another commitment in March 2019 to drive continued improvements in the way Group employees work and take time oﬀ.
Those public statements underline our ongoing eﬀorts to create workplaces where employees can further ﬂourish and grow.

Examples of systems that support diverse work styles●Supporting work-life balance

Introduction of childcare and nursing care systems that surpass legal requirements, increased entitlements for support leave, promoting
uptake of paternity leave, introduction of Group Long-Term Disability (GLTD) insurance, introduction of leave system for employees
receiving cancer treatment*1●Continued improvements in how employees work and take time off

Promoting annual paid leave entitlements (employees encouraged to take holidays in Aug-Oct), weekly refreshment day●Support for flexible work practices

Promoting the use of annual paid leave in hourly increments, promoting the use of existing work systems such as staggered oﬃce
hours, and introduction of telework system*2*1: From April 2019

*2: Introduced in April 2019 after trial period from January 201836

Promoting health management
We believe healthy employees are a source of pride for the Group, as well as a valuableasset. Based on that thinking, we are creating safe and healthy workplaces that

motivate all our employees. We have positioned health management as a key part ofour eﬀorts to build an organization that supports growth. To drive the planning andoperation of related initiatives, we established the Health Support Group in the Group
Personnel Division as a specialist team to promote health management.

■Recognized for Excellence in Health and Productivity Management 2019–White 500
On February 21, 2019, three Group companies were recognized under the 2019

Certiﬁed Health & Productivity Management Outstanding Organizations Recognition

Program (White 500) in the large enterprises category, which is run by the Ministry of

Economy, Trade and Industry (METI) and Nippon Kenko Kaigi to highlight outstanding
companies implementing health and productivity management.
Three companies that received certification
Sogo Medical Holdings Co., Ltd. (ﬁrst time)
Sogo Medical Co., Ltd. (ﬁrst time)

Hokendohjinsha Inc. (second consecutive year)

Examples of health management initiatives
Shared initiatives at the three companies●Improvements to workplace conditions through work practice reforms, such as encouraging employees to take paid leave and normalizing working hours●Health advice desk attended by a full-time public health nurse●Health advice desk attended by specialist external staﬀ

●Self-care training and management line training for mental health●Internal announcements providing health information●Seminars to promote healthy lifestyles●Speciﬁc health guidance for employees in cooperation with health insurance society and medical institution providing health checkups
Initiatives at Sogo Medical Holdings and Sogo Medical●Breast and cervical cancer screening paid in full by the company (women aged 30 or older)●Prostate cancer screening paid in full by the company (men aged 50 or older)*From April 2019

Hokendohjinsha●Companywide projects to encourage communication●Participation in National Federation of Health Insurance Societies’ trial projects to incentivize community work

37Compliance efforts and stanceCompliance is generally thought of in the sense of “regulatory compliance,” or compliance with laws and internal regulations. However,

we undertake compliance in a broader sense. In addition to complying with laws, we consider compliance to mean acting in an ethicalmanner and eschewing any activity that would inconvenience society as we strive actively to meet society’s expectations. Our compli-

ance goes beyond obeying the letter of the law, and our actions extend to a respect for the social norms that form the background ofthese laws.

We endeavor to be a company that delivers essential value to all people. As such, we remain sensitive to changes in society, considering
individually what society requires and following through with actions to satisfy those needs.

38