SUGI Pharmacy Group Integrated Report 2024

SUGI Holdings Co., Ltd.

62-1 Shin’e, Yokone-machi, Obu-shi, Aichi, 474-0011, Japan
TEL: 0562-45-2700

FAX: 0562-45-2702

https://www.sugi-hd.co.jp/english/

Integrated Report

Pharmacy GroupManagement Philosophy
Table of Contents Integrated Report 2024
1

Management Philosophy
We contribute to
local communities throughour sincere, kind services.
We help many more people smile,
Hoping for the happiness of each employee,
Hoping for the happiness of each customer, andHoping for the happiness of everybody.

2
3

Management Philosophy
Table of Contents
SUGI Pharmacy Group’s Mission

01 SUGI Pharmacy Group’s Value Creation Story
15
27

Message from the President
Growth Milestones

29

Figures Showing the SUGI Pharmacy Group’s Strengths-Six Kinds of Capital Underpinning the Business Foundation -31

Figures Showing the SUGI Pharmacy Group’s Sustainability

33

Value Creation Process

02 Strategy Implementation Framework and Group Companies’
Business Reports and Profiles

37
39
53
55

Market Environment
Organizations and Business Operations to Proceed with the Total Healthcare Strategy
Financial/Non-financial Highlights
Message from the Chairman

03 Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

59
61
63
77

Closer to you and more reliable for you. Serving as the source of your smile.

85
93

103

Corporate Watchwords and Management Philosophy at the Time of Our Establishment

Corporate Watchwords

Management Philosophy

Kindness
Serve customers with sincerity
and kindness.

<For Society>
Strive to create a corporate framework
enabling us to contribute to local
communities by selling medical andpharmaceutical products, health foods,
cosmetics and daily items and bydispensing prescriptions.

HonestyWork with business partners
with humility and honesty.
Trust
Be trusted by both customers
and business partners.

1<For Employees>
Strive to create a corporate framework
enabling the company to grow together
with employees with the aim of ensuring
their happiness.

Priority Issues (Issues of Materiality) for Proceeding with Sustainability Management
Five Themes and Priority Issues (Issues of Materiality)
Healthy Community
Sustainable Business Partnership
Contribution to the Global Environment
Healthy Workplace Environment
Corporate Governance

04 Fact Data
119
120
124

Financial IndicesNon-financial Indices
Consolidated Balance Sheet

125

Consolidated Statement of Income and Consolidated Statementof Comprehensive Income

126

Consolidated Statement of Cash Flows

127
128

Stock Information
Corporate Profile

2

SUGI Pharmacy Group’s Mission

Focus on Each Individual

Respect for Each Customer
in Front of Our Eyes
Point Membership(Unit: 10,000 people)
2,000

1,645

1,804

1,941

2,083

2,223

Point Membership:

1,500
1,000
500
0
2019

3

2020

2021

2022

2023

(FY)

Stimulate Each Employee’s Capability andEnhance Their Motivation

22.23

millionThe SUGI Pharmacy Group began in 1976 as a pharmacy
operating in an area of only 16 tsubo (1 tsubo = 3.3 m2) inNishio City, Aichi Prefecture. Since then, we have been
supported by local customers. In FY2023, the annual total
number of visitors to our pharmacies reached 340 million,
while our point membership increased to 22.23 million. Asa local “family pharmacy,” we are committed to enhancing
citizens’ lifelong wellness.

Employees’
motivation

Human Resources
Are an Asset

Health andsafetyHuman Resources

Human
Are an Asset
asset
development Visualize roles, skills, and intentions
and place a focus on each individual.

Human asset
acquisition andretention

Legalcomplianceand corporate
culturalreformDiversity

In the SUGI Pharmacy Group, we are striving to focus on each
employee by proceeding with human capital management
based on the six principles of “employees’ motivation,”“human asset development,” “human asset acquisition andretention,” “legal compliance and corporate culturalreform,” “diversity,” and “health and safety.” We are working
toward achieving sustainable growth by realizing the Total
Healthcare Strategy and practicing the Management Philosophy, which embraces “kind behavior,” “contribution to local
communities,” and “employees’ happiness and smiles.”4

SUGI Pharmacy Group’s Mission

Contribution to Community Healthcare

Operating Prescription Dispensing Drugstores– Our Unwavering Focus since Our Establishment

FY2023

Percentage ofthe prescription
dispensing storesin the SUGI Pharmacy Group:

81.8

%

5

A Wide Variety of Experts Accommodating
Needs from Local Communities
Experts *including partner employees
Total number of pharmacists“Family pharmacists”

Board-certified Pharmacists ofAmbulatory Cancer Chemotherapy

Accredited Pharmacists ofAmbulatory Cancer Chemotherapy

4,021

846

7

5

Beauty advisors

Nationally certified dieticians

NursesRegisteredpharmaceutical distributors

1,222

468

113

10,0296

SUGI Pharmacy Group’s Mission

Emphasis on Dedication to Prescrip-

Prescription Dispensing Know-how Accumulated
since Our Establishment
Number of Prescriptions
Filled

+14.3% 14.75 million

from theprevious FYprescriptions(Unit: 10,000 prescriptions)
1,400

158.7

1,200
1,000

previous FY

billion yen

Home-visit Prescription Dispensing to Address
the Super Aging Society
Home-visit Prescription
Dispensing Service Users(Unit: people)
250,000
200,000

160,411

176,037

Target250,000

189,109

No. of medical institutions whose
prescriptions are filled by us

600
400
200
0
2019

2020

2021

2022

2023

(FY)

59,193

institutions

Stores Specializing in Home-visit
Prescription Dispensing
Target58(Unit: store)
60
50

43

40

150,000

800

7

Sales of prescription+11.5%
dispensing
from thetion Dispensing

30
100,000

28

20

50,00010

0Imaike-Minami Store(specializing in home-visit prescription dispensing)

0
2021

2022

2023

2025 (FY)

2022

2023

2024 (FY)8

SUGI Pharmacy Group’s Mission

Total Healthcare Strategy

Support for Each Individual’s Lifelong HealthSelf-Care

Medical Careand
Medication

9

Elderly
Nursing
Support andDaily Life
SupportContribute to Local
Communities throughTotal Health Support, Ranging
from Self-Care to Medical
Care, Medication, Elderly
Nursing Support, and Daily
Life Support

DX to Enhance the Value of Each Individual’s
Customer Experience
SUGI Pharmacy app

12.02 million downloads(FY2023)SUGI Smartphone Medicine Service App(Family Pharmacy App)0.95 million downloads(FY2023)

Number of App. Downloads
Total:

12.97

million downloads (FY2023)

The membership of our apps comprises the base for a variety ofour digitalized healthcare services and sales promotion tailored
to individual needs. In FY2023, we focused on promoting thedownloading of each app and achieved 12.97 million downloads. We will continue to provide digitalized services, including
various healthcare services designed for each customer to enjoy
an even more valuable experience, and proceed withdigitalized sales promotion tailored to individual needs.

10

SUGI Pharmacy Group’s Mission

Expansion of Our Store Network
SUGI+ Haneda Innovation City Store

Shinshu University Store (pharmacy locatedon the premises of a medical institution)

Nagoya University Hospital Store (pharmacy
located on the premises of a medical institution)

Development ofMulti-functional Stores

Minami-Senri Station Road Store(medical mall)for the Enhancement of
the Healthcare Network
SUGI Pharmacy Home-Visit Prescription
Dispensing Center Nagoya Kanayama Store,
next to an elderly housing facility with careservices

Uchiyama Store(featuring a medical institution)

Network Consisting ofMore than 1,700 Stores

Hokkaido and Tohoku area
Hokuriku and Shinshu area

83 stores
No. of stores (as of the end of February 2024)

1,718

stores in total

3 storesKansai area

COSME CARAT Omokado Store567 stores

Kanto area

483 stores
Chubu area

582 stores
11

Hara-Minami Store(featuring a medical institution)

NIHONDO KAMPO BOUTIQUE

Atsumi Hospital Store (pharmacy located on the premises of a medical institution)

12

SUGI Pharmacy Group’s Value Creation Story

01
15

Message from the President

27

Growth Milestones

29

Figures Showing the SUGI Pharmacy Group’s Strengths- Six Kinds of Capital Underpinning the Business Foundation -31

Figures Showing the SUGI Pharmacy Group’s Sustainability

33

Value Creation Process

For nearly half a century since its establishment,
the SUGI Pharmacy Group has never ceased its growth.
With its eye on a dramatically changing market, the SUGI Pharmacy Group willcontinue to create value toward achieving its ideal vision.

Strategy Implementation Framework and Group Consolidation of the Value Creation Foundation/
Companies’ Business Reports and Profiles
Commitment to Issues of Materiality

SUGI Pharmacy Group’s
Value Creation Story

Fact Data

13

14

Message from the President
SUGI Pharmacy Group’s Value Creation Story

SUGI Pharmacy Group Striving toServe as the “Main Framework
Underpinning Local Healthcare” toContribute to Everybody’s
Healthy, Rich Lifestyles
Katsunori Sugiura
Representative Director & President
SUGI Holdings Co., Ltd
Representative Director & President
Sugi Pharmacy Co., Ltd.

External Environment Surrounding
the SUGI Pharmacy Group’s Business
Operations and the Group’s
Response Policy
In FY2023, the COVID-19 restrictions on face-to-face interactions and travel were lifted, allowing our daily life to finally
return to normal. As a result, there were some positive changes, such as the resumption of economic and social activities
and a gradual economic recovery. However, the military
conflicts in Ukraine and the Middle East caused resource
prices to continue to rise. Coupled with the weak yen, such
events led commodity prices to remain high, making consumer spending depressed. On the other hand, inbound demand
showed signs of recovery. Some predictions suggest that the
number of foreign visitors to Japan in 2024 will exceed thenumber in 2019, before the onset of the COVID-19 pandemic.
The FY2024 real GDP is expected to show positive growth,
but there are signs of slowdown from FY2023, making thesituation remain unpredictable.
In the drugstore industry, we believe that M&A
between major drugstores and intensifying competition will rapidly eliminate many players from themarket, leading to an oligopoly throughout Japan.
In the prescription dispensing pharmacy industry,
the revision of dispensing fees is increasingly
severe year by year, and there is an ongoing trendof a shift to DX* in pharmacy operation, as
indicated by electronic prescription and online
medication instructions. Following the national
policies of “family pharmacy” and “medical DX,”
we need to focus on communication withcustomers, home-visit prescription dispensing
services, and the shift to DX.
In these circumstances, we understand that we
operate in one of the few growing industries

in Japan, a country experiencing an aging population andlower birthrate. In tandem with an increase in aging population, the number of those with interest in their health andbeauty is growing, making us expect that the healthcare
industry will further expand. Guided by the Total Healthcare
Strategy, we would like to explore a wide variety of possibilities and actively cooperate with entities sharing the same
ambitions as ours.
Recently, the SUGI Pharmacy Group was newly joined by the
Kampo counseling company NIHONDO Co., Ltd. and theprescription dispensing pharmacy chain operator Hikari PharmaCo., Ltd. In addition, we announced (through a press release in
February 2024) our alliance with I&H Co., Ltd. with an eye on thecompany joining our group as a subsidiary in the future.
By integrating the business know-how and resources ofeach company within the SUGI Pharmacy Group, we will
accelerate our business growth and work together to develop
into a healthcare company trusted by local citizens.
Domestic consumption will continue to decline due to a declining birthrate, aging population, and shrinking population. The
SUGI Pharmacy Group continues to actively manage companies engaged in new business operations, such as overseas
expansion. While providing our cultivated know-how,products, and services for local partner companies in Asian
countries, which will grow further from now on, and cooperating and collaborating in a wide variety of forms, we are aiming
to become the “Main Framework Underpinning Local Healthcare” not only in Japan but also in foreign countries.

SUGI Pharmacy Group’s
Commitment to Creating Value by
Leveraging Its Features andAdvantages
The SUGI Pharmacy Group boasts a wide variety of experts,
such as pharmacists, nationally certified dieticians, beauty*DX (digital transformation): Improving business operations through the use of digital technology

15

16

SUGI Pharmacy Group’s Value Creation Story

Ulan bator

Affiliated Companies
and Partner Companies
for Overseas Business
Expansion

Japan

TaiwanHong Kong
VietnamThailandand inventory outside the stores and place an order on our
EC website.

Malaysia

Realization of the Concept of “SUGI Pharmacy
on the Palm Anytime and Anywhere”

Jakartaadvisers, nurses, and registered pharmaceutical distributors.
Of particular note are as many as 4,000 pharmacists.
Affected by the continuing shortage of pharmacists, manyprescription dispensing pharmacies and drugstores arebeing forced to secure pharmacists urgently. In addition,
supermarkets, convenience stores, and EC businesses aremaking inroads into the field of prescription dispensing,making it even more challenging to secure pharmacists.
Despite this trend, we steadily secure pharmacists, and this is
one of our great advantages.
We are confident that this has resulted from the fact that
we have always been taking on the challenge, since thedawn of the drugstore industry, of realizing our growth bydeveloping a chain of prescription dispensing drugstores.
Our unwavering dedication to prescription dispensing that
we have continued since our foundation presents a specificvision with local communities, and also with pharmacy
students and pharmacists working actively who would liketo place a focus on each patient, and stirs empathy among
them. This gives us a great advantage in terms of recruitment.
By pushing forward with our strategic dominance ofsetting up new stores in specific areas, we are expanding

17

SUGI Point
payment/
exchange

our operating scale in the metropolitan areas of Kanto,
Chubu and Kansai. In FY2023, we also actively opened
stores designed to meet the needs of tourists visiting Japan.
In FY2023, we newly set up 144 stores, a considerable
increase from 107 stores in the previous fiscal year, indicating that we remained one of the industry’s leaders in termsof the number of annual store openings. As of the end of
February 2024, the number of stores of the entire SUGI
Pharmacy Group reached 1,718. The percentage of prescription dispensing stores, which is one of our advantages,
increased to 81.8%, one of the highest figures among major
drugstore operators. This serves as a source for creating
value when we implement the Total Healthcare Strategy.
We would like to contribute as a reliable “family pharmacy”
that can underpin all the health stages of customers, frombirth until the end of their life. To that end, not only are weestablishing new stores, but we are also actively renovating
existing stores to enlarge their dispensing rooms andwaiting rooms. We will continue to ensure that pharmacists
and other in-store experts can fully demonstrate theircapabilities in order to contribute to the realization ofsustainable, comprehensive community care centering on
medical institutions.

Joint
campaign
with suppliers

SUGI Smartphone
Medicine Service App
We are also reinforcing our commitment to digitalization.
We provide app services for customers to enjoy even more
comfortable and healthier lives. These services are increasing customer satisfaction and leading app users to visit
physical stores or use other services, resulting in the generation of a virtuous circle. Striving to reflect comments from
customers, we continue to improve the functions of the
SUGI Pharmacy app, boasting more than 12 million downloads and leading our digitalization strategy. By providing
information and coupons for individual customers according to the segment, we are aiming to raise the quality ofcustomer experiences and the level of customer satisfaction. In addition, by reinforcing our ability to present
proposals regarding products and services so that eachcustomer will become even more satisfied, we are striving
to deepen our ties with them. We are also aiming to establish an environment in which customers can feel “SUGI
Pharmacy on the Palm Anytime and Anywhere” by ensuring that customers can use their smartphones or shopping
carts as checkout machines at physical stores, as well as byenabling customers to check stores’ product lineup, prices,(Family Pharmacy App)

SUGI Pharmacy app
Not only do we provide online counseling services, but wealso use digital devices at stores to present proposals in thefield of beauty items and proposals regarding lifestyles,
thereby increasing customer satisfaction.
By establishing an environment in which each in-store
employee can fully demonstrate their capability, we canhelp them improve their working style and enable them toconcentrate on communication with customers, whichleads to even better customer satisfaction. We will actively
proceed with DX in order to generate value for customers
and all the other stakeholders. In the SUGI Pharmacy
Group, we will further consolidate our strengths as sources
for generating such value. To underpin community healthcare and contribute to local communities, we will continue
to address the five themes and 16 priority issues that wehave set, proceed with sustainability management, andcommit to realizing a sustainable society.

18Representing the entire vision of our various initiatives, theTotal Healthcare Strategy serves as our operating foundation.
Guided by the strategy, in which “health and medical care” isset as the key phrase, we provide support for customers andpatients regardless of their health condition while addressing
the aging population and lower birth rate confronting
Japanese society and taking advantage of digital technology
created one after another in its continuous evolutionary
process. From birth until the end of life, human life isfrequently supported by medical care and medicine in various
situations. Using such medical care and medicine, people
strive to treat disease and injury, address changes caused byaging, and maintain their good health. Under the Total
Healthcare Strategy, we divide human life into the following
three phases: the “self-care” period with a focus on primaryprevention and secondary prevention to maintain a healthy
life; the “medical care and medication” period, when people
develop diseases and receive treatment for their symptoms in
the acute phase or the chronic phase; and the “elderly
nursing support and daily life support” period. This strategy
shows our commitment to local residents’ lifetime efforts fordisease prevention and health management, thereby striving

to contribute to their good health through a full lineup ofcare. With our prescription dispensing drugstores serving as
the hub, we would like to establish a healthcare network byforming partnerships with physical facilities, such as healthcheckup centers, nursing facilities for senior citizens, andfitness centers, and ensuring cooperation with local governments while making full use of DX. Such a network will
provide us with a platform for using the physical and thedigital seamlessly with a focus on local communities. The
platform will enable us to ensure points of contact withcustomers regardless of their health condition and provide
the most appropriate product and service for each customer.
Many citizens consult doctors after some health anxiety or
worry arises, but such a conventional approach will make it
impossible for them to fully enjoy their lives in the super-aging society, which is experiencing the advent of the so-called“100-year life.” We need to continue to support local
residents’ healthy lives by ensuring cooperation at each stage
with local governments, health insurance associations,medical care and elderly nursing care workers, and players inmany other fields. We urgently need to establish a network ofplayers mainly in the medical field and also other industries inorder to support communities, senior citizens, and theirfamilies. We have already received endorsement from somecompanies and local governments, leading to the expansionof a healthcare network in various communities. This strategy

Total Healthcare Strategy

Self-care category

Medical care andmedication category

Elderly nursing support anddaily life support category

Prescription
dispensing

Health checkup

is also highly regarded abroad, enabling us to cooperate withlocal companies in Asian countries and proceed with various
initiatives. We will continue to work with a wide variety ofcompanies, organizations, and local governments and further
accelerate the speed of our efforts toward realizing the Total
Healthcare Strategy.

SUGI Pharmacy Group’s
Sustainability Management
In 2021, to develop a framework for proceeding with sustainability management, we established the Sustainability
Committee and the ESG Promotion Office (presently the
Sustainability Promotion Section of the Corporate Branding
Department) and set five themes and 16 priority issues (issuesof materiality), thereby intensifying our efforts.
An increase in awareness of the SDGs is found in consumers of all generations, but this trend is evident particularly
among young Millennial consumers and Generation Z. A
familiar example is ethical consumption, meaning a selectionof products produced with greater consciousness of theenvironment and human rights. The world is casting a stern
eye on how we address challenges that need to be handled
throughout the entire supply chain, such as suppliers’commitment to human rights. Based on an increase ininternational awareness of the issue of human rights and also
in view of our corporate social responsibility, we formulated
the SUGI Pharmacy Group Human Rights Policy in FY2022 andthe Supplier Code of Conduct in FY2023, thereby beginningto establish a framework for us to fulfill our responsibility
throughout our supply chain. From now on, we need to ask
our suppliers to use raw materials procured in due consideration of human rights. While establishing our own database,we will continue to reinforce our commitment to humanrights due diligence, especially in the field of in-house development of products.

We will also continue to focus on recycling resources. Embracing the concept “domestic recycling of domestic resources,” wewill fulfill our responsibility as a distributor of many products
and make as much contribution as possible in cooperation withmany partners. In FY2023 again, we strengthened our commitment to Bottle-to-Bottle Horizontal Recycling, intended torecycle used PET bottles into new PET bottles, with the numberof our stores serving as a collection point increasing to a few
dozens. Although this project is still on a test run, some stores
serving as a collection point for recycling PET bottles are experiencing win-win situations, as indicated by evident increases in
the frequency of customers’ visits to the stores, and a good
reputation among customers regarding our collection of PET
bottles. Meanwhile, to support the recycling of medicinepress-through-pack (PTP) sheet waste generated in a large
quantity mainly in the field of prescription dispensing, we serve
as a collection point. Furthermore, we collect uniforms to bedisposed of so that they can be upcycled into resources forin-house equipment. We also work with food banks to address
the problems of food loss and poverty. By doing so, we willcontinue to handle social problems step-by-step, which willlead us to contribute to local communities and ultimately toestablish a status as a company loved by local communities.

SUGI Pharmacy Group’s Value Creation Story

SUGI Pharmacy Group’s Total
Healthcare Strategy

Running a food drive

Online counseling, medical examination,and medication instruction

Fitness

Diagnosis
Healthcheckup

Health counselingand measurement

Treatment

Secondary
prevention

Primary
prevention(Healthy lifestyles)

Elderly
nursingcare
Personal
healthrecord(PHR)

HealthyCommunity

Long-term elderly
nursing care

Chronic-phasemanagement

Terminal care

Terminal
stage

Views on Carbon-Free Management
and Progress in Our Commitment

Sustainable
Business
Partnership

Corporate
GovernanceContribution to
Local Communities

Showing a commitment to local residents’ lifetime efforts in disease prevention and health management,
and contributing to their good health through a full lineup of care

Healthcare network connecting approximately 1,700 physical stores and local communities

19

Healthy
Workplace
Environment

Contribution
to the Global
Environment

Setting the realization of a carbon-free society as one of ourpriority issues, we are accelerating our commitment. In the firstyear of our commitment, we visualized the emissions fromScope 1 (direct GHG emissions), with our focus on the
consumption of gas for company cars, and the emissions fromScope 2 (in proportion to the use of electricity) and set a CO2
emissions reduction target to be achieved by 2030. Although
we had aimed to reduce CO2 emissions per store by 35% by
FY2030 compared to FY2014, we made an upward revision toa 50% reduction at an early phase. In December 2021, we
announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In linewith the disclosures recommended by the TCFD, we have beenproceeding with appropriate efforts through the Sustainability
Committee and the Board of Directors, such as identifying our20

long-term cooperation or figure out ideas while establishing a
consortium or other frameworks. In FY2023, we strode our firststep by joining the Challenge Carbon Neutral Consortium andconducting a demonstration experiment to display, promote,and sell environmentally friendly products from participatingcompanies. We still need to formulate an ideal vision from afuture perspective and consider many things from scratch.
Although we have not yet set a specific path, we endeavor toaddress environmental problems through out-of-the-box
alliances. In this regard, we would like to receive guidance frompartners in a wide variety of fields.

Photo session at a press conference of the Challenge Carbon Neutral
Consortium

Human Asset Strategy
Solar power generation panels installed on a store roof

Meanwhile, our total CO2 emissions from Scope 3, which overs
all the activities in all the phases of a supply chain, ranging fromproduct procurement to manufacturing, sales, logistics anddisposal, mark approximately 1.7 million tons, more than 10times the emissions from Scope 1 and Scope 2. However, it isdifficult for the SUGI Pharmacy Group alone to reduce theemissions from Scope 3. We need to ensure cooperation withvarious companies, figure out ideas from scratch together withthem, and carry out demonstrative experiments promptly in atrial and error manner. While adding value to products with less
CO2 emissions by avoiding unnecessary packaging and using
vegetable oil ink, we need to demonstrate ingenuity and makeefforts in sales so that such products will appeal to customers.
Needless to say, we must refrain from distributing unnecessary
sales campaign items or creating unnecessary point of purchaseadvertising. We also need to work together to improve theaccuracy in forecasting the units of sales, avoid unnecessarypurchases, reduce returns and disposals, and ensure cooperation between the manufacturing, distribution, and sales
functions. It is also important to accelerate our commitment torecycling resources toward reducing waste by, for example,
collecting PET bottles and helping them to be recycled into new
PET bottles. When meeting with suppliers, we are asking them
to work together with us toward reducing the emissions fromScope 3. We are calling on them to engage in mid- and21

As indicated by rapid digitalization, the aging population andlower birthrate, the advent of the so-called “100-year life,” andchanges in workers’ views on careers, the environment
surrounding companies is changing greatly. Acknowledging
employees as capital, we believe that human resources growinto key players for creating value. We will make an active
investment in our human assets so that we can enhance ourcorporate value. Based on this approach, we will link ourmanagement strategy with our human asset strategy topromote personnel system reforms, ensure that the right staff
members are assigned to the right positions, proceed withhealth and productivity management, and improve employee
engagement.
While visualizing personnel data, we will prepare a humanasset portfolio in order to visualize how many employees withwhat types of skills are needed by business units and departments and clarify the gaps between the ideal and the real.
Based on the portfolio, we will take measures to close the gaps,
such as hiring new employees by other methods than employing new graduates simultaneously, relocating existing employees, obtaining external human assets, establishing alumni
networks, and employing experts and specialists even more
actively. Moreover, we will continue to pursue a work environment in which employees, who constitute our most important
asset, can continue to work healthily and happily as long as theylike. The SUGI Pharmacy Group has been selected as an
outstanding entity in terms of health and productivity manage-

ment for the sixth straight year. However, we cannot boast
ourselves yet as the health and productivity management
leader among the many companies applying for the selection.
We will provide support for employees to quit smoking so thatthe current percentage of smokers at more than 11% will fall
below 10%. Toward improving employee engagement, we will
enhance their work-life balance and establish a workplaceenvironment where everybody can fully demonstrate theirability by, for example, strengthening specific health guidance
to reduce lifestyle-related diseases, providing training to reduce
mental health issues, increasing the response speed of ourconsultation hotline system, improving the percentages of paid
leave and parenting leave taken, and reducing overtime.
In addition, as part of our commitment to human rights, we will
strengthen our efforts to improve psychological safety within
our organizations. The “chain of smiles,” meaning employees’smiles leading to customers’ smiles, is a key concept in realizing
our Management Philosophy. In other words, if store employees and partners feel more motivated, it will lead to theirgreater contribution to customers, better work performance,
and ultimately higher productivity.
Psychological safety is important when we think about
motivation. If our employees feel greater psychological safety, it
will help them to be true to themselves in their daily lives, saywhat they would like to say, take on bold challenges, and takekind and courteous actions for customers. We have a hotline for
employees to call about any workplace concerns and worries.
With the number of calls exceeding 1,400, we were recently
featured in the media as one of the best Japanese companies interms of the whistleblowing environment. To immediately

inspect a whistleblowing case, we have established the Area
Human Resources Departments, thereby increasing our
response speed and effectiveness. Moreover, to realize thetheme “Focus on Each Individual,” we are striving to ensure that
employees can hold consultations with their supervisors moreeasily. In addition, we are emphasizing the initiatives of store
visits by all officers and direct employee interviews by the
President. In FY2024 again, we will continue to strengthen ourefforts to increase psychological safety.

DX Strategy

SUGI Pharmacy Group’s Value Creation Storyrisks and opportunities and examining a roadmap toward the
reduction of CO2 emissions. Our recent specific efforts to
reduce CO2 emissions include installing solar power generation panels on the roofs of dozens of stores under an onsite
PPA. While doing so at both existing and newly opened stores,
we have discovered that it will be difficult to achieve our CO2
emissions reduction target simply by installing solar panels on
the roofs of all our stores. We will not count simply on CO2 freemenu services, but rather will try various other schemes
without hesitation, such as an off-site PPA, which features“additionality” (for an effect leading to investment in a newrenewable energy facility), and self-consignment of renewableenergy, thereby striving to fulfill our social responsibility. In
FY2024, we already concluded a contract to procure renewable energy for a few dozen of stores through an off-site PPA.
We will further accelerate our carbon-free efforts.

Our DX strategy originates from our determination to makeour customer services even more fulfilling by enhancing our
productivity and improving customers’ lifetime value. It is safe
to say that person-to-person interactions, which cannot be
digitalized, through counseling and other customer services
represent our strongest point. To what extent can we present
new value by using digital technology? To what extent can werealize not only the digitalization of operations but also thereforms of organizations, operating processes, and even our
corporate culture? By addressing these questions, we will makeus even more competitive and establish our superiority. Of
particular note is competitive superiority. Various industries areexperiencing the phenomenon of new players’ grabbing aconsiderable market share at once and reversing the market bytaking full advantage of digital technology. In some industries,
there is a shift in purchasing behavior toward EC, accompanied
by a shift in companies’ focus from physical stores to EC.
Companies failing to keep up with this trend have been
eliminated from the market. It will become even more import-

Annual Number of Calls to “Anything Consultation
Call Service for All Workplace Concerns”
Creating an open work environment in which
employees can seek consultation appropriately for
any workplace concerns!
(Number)
2,000

1,585

1,483

2022

2023 (FY)

1,500

1,254
1,000

500

832
430

0
2019

2020

2021

22

Customer experience enhanced with the shopping smartphone app

fortune to have opportunities to take care of our challenges, wewill ensure that FY2024 is a year when each management leader
tackles the challenges based on the recognition that they are
their own challenges.

Response to Changes in the Field of
Prescription Dispensing
As indicated by the launch of the operation of electronicprescription and the promotion of the online qualification

Ideal Vision of a Digital Communication Ledger
Support for each expert

Service personalized for each customer

History
Adviceconfirmation as a generally mandatory effort, there are various
ongoing initiatives beneficial to patients, medical institutions,and pharmacies. While taking full measures, such as establishing
the necessary frameworks and response schemes, we havecompleted the introduction of an online qualification confirmation system, which is used at all our stores. For patients, electronic prescription is beneficial because it enables them to receive
medical examinations, prescriptions, and dispensing services
based on accurate and real-time information, which will
enhance therapeutic effects, and reduce unnecessary medicine
through polypharmacy checking. For medical institutions andpharmacies, electronic prescription makes it possible to share
the necessary information between different medical institutions, meaning that medical institutions and pharmacies can
respond accurately while ensuring safety for the relevant
patients. It is also expected that they can reduce labor for data
entry and document filing for storage and save storage space. In
other words, electric prescription will lead to improved
therapeutic effects, reinforced risk management, and enhanced
productivity, ultimately resulting in lower total costs of all
medical services. We are addressing data health reform, which
will enhance patients’ safety and convenience and allow themaccess to higher-quality medical services, in a well-planned
manner. The direction of this policy aligns precisely with thedirection of the SUGI Pharmacy Group’s Total Healthcare Strategy. Since the institutional reform is expected to generate great
benefits in the field of Japanese medical services, we would liketo lead the entire industry in proceeding with the reform. Led by
the national government, an institutional reform is in steadyprogress in the field of prescription dispensing, which is the main
business domain of the SUGI Pharmacy Group, in accordancewith the Pharmacy Vision for Patients, presented in 2015. This
makes us feel once again that our decision to serve local communities by responding to a multiple number of medical institutionsin the communities, rather than depend on specific medical
institutions, is correct. The drug price revision has not had an
insignificant impact on our sales from prescription dispensing.
For the revision of the technical fee, we have shifted our focus on
operations at pharmacies, from the handling of drugs tocommunication with customers. We ask individual pharmacists
to provide even more support for local patients than they havedone so far. Since there is a call to provide home-visit medical

Electronic Prescription Easy to Conclude the Process Online

Digital communication ledger

Online medication
instruction and medicinedelivery

Onlineexamination
Home

Medicalinstitution

Assessment

23

Pharmacy

Electronic prescription2023

Launch of theoperation ofelectronic prescription

2024

2025

Revision of thedispensing fees andelderly nursing
support fees

Function as a “family
pharmacy” assigned to
all pharmacies

Pharmacy
Vision for
Patients

Revision of drug prices
Revision of drug prices

Jan.

Apr.

Jun.

AutumnSUGI Pharmacy Group’s Value Creation Story

ant not only to improve some operations through digitalization but also to enhance customers’ lifetime value by utilizing
DX for establishing points of contact with customers andensuring continuous ties.
Accordingly, in line with the principle “SUGI Pharmacy on thePalm Anytime and Anywhere” to expand the scope of our pointsof contact with customers and deepen their impact under our
DX strategy, we periodically enhance and renovate the functionsof the SUGI Pharmacy app. The app distributes information ondisease prevention and health maintenance, unifies management of customer information through ID integration, andprovides coupons based on customers’ purchase histories,
enabling us to establish one-to-one relationships without
placing stress on customers. For customer services at physicalstores, we will also reinforce digital communication. For
example, we will keep a digital record of requests presented bycustomers and samples provided to customers in the field ofcosmetics and use the record for sales promotion on the SUGI
Pharmacy app. We will also compile a record of counselingservices provided by our nationally certified dieticians. In the
future, we would like to create a ledger of digital communication with customers to realize unified management of theirhealth condition.
By realizing the concept “SUGI Pharmacy on the Palm Anytime
and Anywhere” and digital communication, we endeavor toprovide customers with opportunities to experience the physicaland the digital seamlessly. For customer experience throughdigital tools, the SUGI Pharmacy app, boasting 12 million downloads, will play a major role. Presently, the SUGI Pharmacy app
annually draws a total of approximately 350 million visitors tophysical stores. Our future challenges include how our physicalstores will handle an explosive increase in needs expected to be
induced by the digital. We will proceed with our commitment todigitalization to carefully address an explosive increase in thenumber of customer service opportunities, take an approachdifferent from a mere extension of our conventional measures,and further raise the quality of services provided at physicalstores. We believe that no companies can survive the future if
they cannot handle such challenges. Deeply appreciating our

Apr.

Online qualification
confirmation
becoming mandatory
in principle

care backed by partnerships between players from a wide
variety of industries, we also need to simultaneously work on
strengthening training programs, including those for improving
each pharmacist’s skills, and enhancing operating efficiency
through DX. The number of prescriptions filled by the SUGI
Pharmacy Group has been on a year-on-year rise. To enable
many more patients to use our pharmacies even more comfortably, we are making efforts to reduce the waiting time. Whileplacing our first priority on safety, we are improving our operations, introducing new equipment, raising our efficiency in every
aspect, and increasing our operating speed, thereby taking on
the challenge of reducing patients’ waiting time. After taking
some measures at one of our large-scale prescription dispensing
pharmacies, we found a drastic reduction in the waiting time,leading to an increase in the number of filled prescriptions. We
will ensure that these measures are shared with other stores sothat we can earn further trust from patients.

Mid-Term Management Plan
The year 2026 will mark the 50th anniversary of the foundationof SUGI Pharmacy. How should the SUGI Pharmacy Group be in
the memorial year? Having formulated the ideal vision based ona future perspective, we have established the Mid-Term
Management Plan. Starting from FY2022, the plan consists of apart for the first two years and that for the second three years.
The first two years are for consolidating the foundation forfurther growth, while the second three years are for growing
into a corporate group with sales of 1 trillion yen, with our
FY2026 sales target set at 1 trillion yen. The mid-term planconsists of a “growth strategy” and the “reinforcement of the
management foundation.” The growth strategy features thethree themes of “Deepen operations in the field of healthcare,”“Change customer experience through DX,” and “Expand
cooperation and co-creation efforts.” For each theme, we have
set the direction that we should take from now. The reinforcement of the management foundation has the three themes of“Data-based management,” “Cost structure reform,” “HR and24

FY2026
numerical
targetSales:

Reinforcement of
SUGI Holdings’ Functions
Our growth strategy features not only the establishment of
new stores but also a great shift toward digital operation,
healthcare, overseas expansion, and M&A. In addition, thenumber of our group companies is increasing. In thisbackground, in FY2024, we will reinforce the functions of
SUGI Holdings and establish a framework to support thegrowth of the entire SUGI Pharmacy Group.
As part of the efforts to do so, we will introduce an executive officer system to strengthen the management and supervisory functions and clarify the execution responsibility at
SUGI Holdings. We will create the post of executive officer incharge of “corporate planning and finance” in order toaccelerate the speed of our M&A transactions, investment,

1 trillion

667.6
billion yen

744.4
billion yen

For consolidating
the foundation forfurther growth

2022

2023

FY2026: 50th anniversary year
Sales:

yen

1 trillion yen

Management with Awareness ofCapital Cost and Stock Priceate
por yenronacard 1 trilliowtof
wth sales o
o
r
G
ith
pw
u
o
gr

2024

2025

2026

Starting from FY2024, we will appoint an executive officer incharge of corporate planning and finance, thereby strengthening management with awareness of capital cost and stock
price.
After accurately quantifying our capital cost, we formulate
management strategies and mid-term management plans inview of changes in the external environment and disclose(FY)

Mid-Term Management Plan with the Final Year Set on FY2026● Set up stores with a focus on healthcare (store areas, store types, allianceDeepen operations in the field ofhealthcare

Growthstrategy

with medical institutions)● Maximize synergy between merchandising and prescription dispensing● Establish a SUGI Pharmacy version of comprehensive community care model● Evolve customer experience through digital technology

Change customer experiencethrough DX● Develop one-to-one marketing● Enhance digital membership and increase the percentage of use of prescrip-tion dispensing services

Expand cooperation andco-creation efforts

Reinforcement of the
managementfoundation

Data-based management

etc. and to reinforce the SUGI Pharmacy Group’s corporate
planning, finance, and M&A strategies. Taking account of theincreasing importance of the management of human assets,such as experts and those with management skills within theGroup, we will also establish the post of executive officer
responsible for “HR, management, and risks.” In addition, we
will form the posts of executive officers in charge of thefollowing group-wide affairs: “medical care and prescription
dispensing” to handle prescription dispensing risks andexternal affairs; “DX and branding” to proceed with digitalization and branding; and “overseas operations” to realize
significant
business
growthinthefuture.
In the future, we will also create a framework whereby
execution responsibility will be delegated to the presidents ofour subsidiaries.
In this environment, SUGI Holdings is required to provide
speedy business support and visualization business operations. SUGI Holdings will strengthen its function as the control
center that features a bird’s-eye view of the business situationof each group company and allocates the necessary management resources, thereby providing full-out support.

● Optimize SCM* and develop products and categories by establishing

information linkage between the manufacturing, distribution and sales sectors● Establish healthcare networks both at home and abroad● Make the organizations and operations even more effective

Cost structure reform● Set up stores with high investment efficiency, and renovate existing stores

HR and institutional development● Develop organizations and human assets toward the next generation

their overviews. As for the formulated management strategies and mid-term management plans, we annually checkand analyze the progress and take the necessary measures
based on our management resource allocation plans, including those for investing in launching new business, establishing new stores and associated systems, and developing
human assets. Regarding fundraising for new, large-scale
M&A transactions and business investments, we follow thefinancial policy with the enhancement of shareholder value
on our mind. In addition, in order to raise shareholder value,
we will strive to increase ROE and ROIC on a mid- andlong-term basis, return value to shareholders on a continuousand stable basis, and make investment for further growth.
Setting ROE and ROIC as important indexes for creating
sustainable shareholder value, we will strive to always
improve productivity, total asset turnover ratio, etc. and raise
ROE and ROIC continuously on a mid- and long-term basis.
Financial index

ROE

（％）
12.0

11.0

11.9

9.4
9.0

8.8

SUGI Pharmacy Group’s Value Creation Story

institutional development,” each of which has been reflected in
the strategy to be implemented by the director in charge. In
FY2023, we completed the consolidation of the foundation,
which we had worked on in the first two years. While fundamentally reviewing various strategies, including those for DX,
product development, store openings, overseas operations, andhuman resources, we proceeded with various experiments andinitiatives, which has given us a solid sense that the foundations
has been consolidated. FY2024 sees the start of the three years
for us to grow into a corporate group with sales of 1 trillion yen.
Let me remind you that this mid-term plan presents quantitative
targets based on our own growth potential. On the other hand,
we expect that the drug and pharmacy industries will experience the acceleration of an oligopoly, with M&A transactions
worth hundreds of billions of yen concluded over the next few
years. Based on this expectation, we will operate our businesswith a minimum target of achieving sales of 1 trillion yen.

9.8

6.0

3.0

0

2019

2020

2021

2022

2023 (FY)In the future, we will introduce ROIC as a new index to identify capital cost accurately, improve business portfolio management and investment efficiency for setting up new stores, andallocate management resources, such as those for launching
new business investment, properly. To introduce ROIC, we
have started by visualizing ROIC according to the businesssegment as part of our efforts to establish a necessary framework. We plan to establish links between ROIC and KPIs andbegin trial operations for workplaces. While doing so, we will
accelerate our efforts to form a system for utilizing the ROIC
index and ensure that it takes root throughout the company.
Actually, we have decided to carry out a stock split. The
purpose of the stock split is to lower the stock price per investment unit, thereby making it easier for investors to invest andexpanding the investor base. We have disclosed our dividend
forecast after comprehensively taking into consideration the
3-for-1 stock split of common stock, our basic policy on shareholder returns, and our financial condition. The annual
dividend forecast of 35 yen for the fiscal year ending February
2025 is converted to an annual dividend forecast of 105 yen
before the stock split, an increase of 25 yen in real terms fromthe annual dividend forecast of 80 yen for the fiscal year
ended February 2024. We will continue to strive to operate ina way that will allow many shareholders to feel confident andactively invest in us.

*SCM: Supply chain management25

26

Growth Milestones

●
2023

●
2023

●
2023

●
2023

●
2023

●
2024

Established a joint venture with SUGI Holdings Co.,
Ltd. and Alpro Pharmacy

Concluded a business alliance with Excellent
Wellbeing International Co., Ltd.

Concluded a business alliance with the Sakura Pharmacy
Group

Acquired full ownership of NIHONDO Co., Ltd.

Acquired full ownership of Hikari Pharma Co., Ltd.

Established SUGI Wellness Co., Ltd., a company thatprovides disease prevention support services

SUGI Pharmacy Group’s Value Creation Story●
2023
Concluded a capital and business alliance with Japan
Hospice Holdings Inc.
Concluded a capital and business alliance with Great
Tree Pharmacy Co., Ltd. (Taiwan)
Concluded a business alliance with ALPRO Pharmacy(Malaysia)

●
2022
●
2022

Concluded a business alliance with Omicare Joint
Stock Company (Vietnam)

Concluded a business alliance with Scroll Corp.

●
2021
Concluded a business alliance with PREVENT Co., Ltd.

●
2022

●
2020
Established S Trading Co., Ltd. to supply products toboth domestic and foreign markets

●
2022

●
2020

Transferred to the Tokyo Stock Exchange Prime Market
and the Nagoya Stock Exchange Premier Market●
2020

Launched a specific health guidance service by nationallycertified dieticians

Concluded a capital and business alliance with
Inagora Holdings Co., Ltd.

●
2019
Established DCP Solution Co., Ltd. to provide support
for doctors to open clinics

●
2019

●
2018
Concluded a capital and business alliance with the
MedPeer Group

Established a pharmacy on the premises of a national
university’s hospital, which was the first case in the
drugstore industry●
2018

Transferred to a holding-company system through anincorporation-type company split, with Sugi Pharmacy
Co., Ltd. and SUGI Medical Co., Ltd. newly established

Relocated the headquarters to Obu City and added ourown logistics center to the headquarters●
2008

Changed the trade name Sugi Pharmacy Co., Ltd. to
SUGI Holdings Co., Ltd.

●
2016

●
2008

Acquired full ownership of Iizuka-yakuhin Co., Ltd.

Established the first key store for strategic
dominance in Nishio City●
2008
Acquired full ownership of Japan Co., Ltd.

●
2013

●
2007

Established the first store in the Kanto area to makeinroads into the area

Achieved a corporate integration between Sugi
Pharmacy Co., Ltd. and Japan Co., Ltd.

●
2006

Constructed our own building in front of Mikawa-Anjo
Station and relocated the headquarters there to enhance
the functions of the headquarters

●
2013

●
2003

Established the first store in the Kansai area to makeinroads into the area

Integrated with Iizuka-yakuhin Co., Ltd.

●
2001

Listed on the first section of the Tokyo Stock Exchange

●
2011

●
2001

Introduced the SUGI Point card system to all the stores

Launched as a “family pharmacy” in a small town inNishio City, Aichi Prefecture

●

●
1976

Business Development

●
2017

●
2018

●
2018

●
2019

●
2020

●
2020

●
2021

●
2021

●
2021

●
2022

●
2022

●
2024

●
2024

Concluded a partnership contract with FC
Kariya, a nonprofessional soccer teamAcquired Platinum Kurumin certification

Concluded a comprehensive partnershipagreement with the Faculty of Pharmacy, Kindai
University

Launched sales of a lifestyle-related disease risk
report using big data

Established a joint research course with Kanazawa
University

Established the ESG Promotion Office andthe Sustainability CommitteeAwarded the grand prize of Supply Chain
Innovation Award 2021

Concluded a comprehensive agreement on regional
revitalization SDGs with Aichi Prefecture

Received refugees from Ukraine at SUGI Pharmacy
under a labor support program by Obu City

Established a human rights policy for the SUGI
Pharmacy Group

Made donations for the 2024 Noto Peninsula
Earthquake, including donations collected
through the SUGI Point system

Certified for six years in a row as an outstanding enterprisein terms of health and productivity management

●
2013

●
2015

Launched the donation of AEDs to facilities for senior citizens

Launched the donation of medical wigs to breast cancer
patients

Acquired certification of the generalincorporated foundation Sugiura Community
Healthcare Promotion Foundation as the
public service corporation Sugiura Memorial
Foundation●
2016

Concluded comprehensive partnershipagreements with local governments toward
the realization of sustainable community
development
Constructed a health promotion hub center on
the former site of SUGI Pharmacy’s first store
and provided the land and building to Nishio
City

●
2013

●
2009

●
2009

●
2011

Established SUGI Smile Co., Ltd. to promote
disabled employment

Launched cosmetic therapy at facilities forsenior citizens and hospitals

Donated the SUGIURA Community
Healthcare Center, established on thepremises of the Graduate School of Medicine,
Kyoto University, from our founders Hirokazu
Sugiura and Akiko Sugiura

Established the Sugiura Community Healthcare
Promotion Foundation, with Hirokazu Sugiuraand Akiko Sugiura as its founders

Organized endowment of course on comprehensive community
care systems, which was the first case in Japan, at Nagoya University●
2009

Launched home-visit nursing and elderly
home-care support services

●

●
2008

●
2002

●
2003

●
2005

Launched a home-visit prescription
dispensing service for individual patients

Launched aseptic prescription dispensing ina clean room

Launched a facility-visit prescription dispensing
service for facilities for senior citizens

Community Healthcare and Social Contribution

28
27

Home-visit prescription
dispensing service launched

The Sugiura Memorial Foundation
certified as a public service corporation
SUGIURA Community
Healthcare Center donatedHome-visit nursing service launched
Clean room establishedGreat Tree Pharmacy Store

Aoyama Main Store, NIHONDO
Nagoya University Hospital Store (pharmacy
located on the premises of a medical institution)
Headquarters relocatedto ObuKumami Store opened as the first key store
Former headquartersin Mikawa-Anjo
Listed on the first section of the Tokyo
Stock Exchange
At the time of the establishment

2023 2024

2020
2016

2010
2006
1976 2000

The number of drugstores exceeds 1,500.
The number of drugstores exceeds 1,000.
The number of drugstores exceeds 500.
Establishment

Figures Showing the SUGI Pharmacy Group’s Strengths- Six Kinds of Capital Underpinning the Business Foundation -Prescription Dispensing Know-how Accumulated since Our
Establishment

Intellectual
capitalExperts *including partner employees■ Total number of pharmacists

8,724
47.8%

Genderratio

7

Women:

Men:

52.2%

Genderratio ofmanagers■ Beauty advisors

1,222

Men:

87.0%

*Managers: Those in managerial positions
and those with a certain level of in-house
qualifications

Manufacturing
capital

1,718

stores1,569 stores

468■ Investment in human asset development:■ Nurses

113

500 million yen

144
stores(including 1,283 prescription dispensing stores)

Hokkaido
and Tohoku:

3

Hokuriku& Shinshu:

Percentage
of prescription
dispensing stores:

83

81.8%

Kansai:567

Chubu:

Kanto:

483

582

basis:

744.4 billion yen■ Operating income ratio on
a consolidated basis:

Financial foundation / ■ Equity ratio:
safety / efficiency
％

59.8

4.9％

■ Total assets:

390.5 billion yen■ Operating income on a consolidated
basis:

36.6 billion yen■ Ordinary income ratio on
a consolidated basis:■ Cash and deposits:

43.4 billion yen

5.1％(Unit: 10,000 prescriptions)
1,400

from theprevious FY

billion yen

59,193from theprevious FY

14.75
million prescriptions

Prescription
dispensing:

23.0%

No. of prescriptions filled by SUGI Pharmacy

FY2023Merchandising:

77%

1,000
800
600

Breakdown

400

0Healthcare: 20.0%

Beauty items: 18.4%

Household ware: 18.7%

200

institutions

2019

2020

2021

2022

2023

(FY)

Food: 19.9%

Relationship of Trust with Customers and Local Communities

No. of annual visitors:

SUGI Point membership:

340

22.23

million members

million visitors

No. of agreements with local governments:

100+14.3%

1,200

No.of medical institutions
whose prescriptions arefilled by us:

Number of app downloads:

t

poin

12.97

million downloads*Number of downloads of SUGI Pharmacy app and
SUGI Smartphone Medicine Service appagreements

Natural Capital Underpinning Our Business Operations

Water consumption*

Energy consumption

314,266*FY2022 result■ EBITDA:+11.5%

158.7

NaturalcapitalSound Financial Foundation■ Net sales on a consolidated

Sales ofprescription
dispensing:SocialcapitalNo. of Stores by the Area

Japan Co., Ltd.: 104 stores
Home-visit nursing stations: 16 bases
Stores providing a home-visit service: 601 stores
Home-visit prescription dispensing centers: 43 bases29■ Nationally certified dieticians

10,029SUGI Pharmacy:

Profitability

5■ Registered pharmaceutical distributors

Newly
established*As of the end of February 2024

Financial figures■ Accredited Pharmacists ofAmbulatory Cancer Chemotherapy

Network of Stores Underpinning Local Communities

Number of stores

Financial
capital846■ Board-certified Pharmacists ofAmbulatory Cancer Chemotherapy

13.0%

Women:■ “Family pharmacist”

4,021

Number of full-time employees:

Number of
Prescriptions Filled

SUGI Pharmacy Group’s Value Creation Story

A Wide Variety of Experts Accommodating Needs from Local
Communities

Human
capitalthousand kWh/year

755,045m3/year*Calculated as an estimate by dividing theamount of water charge by unit charge rate
(Obu City, Aichi)*FY2022 result52.1 billion yen
30Figures Showing the SUGI Pharmacy Group’s
Sustainability

Contribution to the
Global Environment➡P63

We are aiming to introduce renewable energy to approximately 100 stores,
excluding the stores already equipped with solar panels, through an off-site
PPA by the end of FY2024.

➡P85

No. of stores providing a home-visit
prescription dispensing service:

601

storesNo. of pharmacies allied withspecialized medical institutions:

3

21

117

storesNo. of stores equipped with an AED:
TargetstoresNumber of stores equipped with solar panels

Local alliance pharmacies:282

20% of all the stores (by the end of FY2025)

storesTarget%TargetTarget

250 thousand patients (by the end of FY2025)

3.5 (by the end of FY2024)
4.0 (long-term target)

31

30

Men:

99

➡P103

%

%
(By the end of FY2030)

9.9

%

421

attendees

Percentage of outside
directors:

57%% Women:

97.4

%

98.9

% Women:

98.6

%

%

➡P77

Sustainability policy
information session forbusiness partners:

55.7

Percentage of employees returning to work afterparenting leave (%)

Corporate Governance

14.4*PET bottles, medicine press-through-pack (PTP) sheets,and clothing

Percentage of employees who took parenting
leave (%)
Men:

Sustainable Business Partnership

Percentage of private brandproduct sales:%

3.2

Health checkup rate:

Target13.0

30% (by the end of FY2029)

Engagement index:

thousand patients

Percentage of eco-friendly
private brand products:

storesHealthy Workplace Environment

Percentage of female managers:

Annual total of users of our home-visit
prescription dispensing service:

189

88

stores➡P93

Percentage of prescriptions sent throughthe SUGI Smartphone Medicine Service app:

16.5

No. of stores collecting resources* for recycling

SUGI Pharmacy Group’s Value Creation Story

Healthy Community*As of May 22, 2024

Percentage of female
directors:

14%

No. of dialogue sessions
with investors:

218

sessions

Percentage ofoutside auditors:

75

%

32

Value Creation Process

Market Environment ➡P37
Changes in values

Technological innovation● Diversification of values● Promotion of 5G and● Aging and declining population● Change in consumer● Need to reduce medical costs

behavior● Shift from ownership tosharing● Global warming● Use of plastics

enhancement of IoT● Integration of the physical andthe digital

Business Model
Sources for Creating ValueBusiness Operations for Creating Value for Society➡P29

Healthpromotion
apps

Human capital
A wide variety of experts

Shopping
truck
service● SUGI Pharmacy Group’s employees: 38,733● Pharmacists: 4,021● Nationally certified dieticians: 468● Beauty advisors: 1,222● Nurses: 113● Investment in human asset

Preventive
care
programVariousservices

Shopping
supportProduct
supply foroverseas markets
and othercompanies

development:500 million yen

Provide products and services forhelping citizens enjoy richlifestyles, and operate one-stop
stores.

Home-visit
nursinge-commerce● No. of stores: 1,718 stores● No. of stores providing a home-visit service:

601 stores● No. of home-visit nursing stations: 16 bases

Financial capitalSound financial foundation

Maximizing
customers’
lifetime value(LTV)

Beautyitems

Healthcare

MerchanShift to DX
disingHome-visit
prescription
dispensing

Medication
instruction

Prescription
dispensing Shift to DX
Medication
follow-up

Household
ware

Food

Medication
management● Total assets: 390.5 billion yen● Capital investment: 32.6 billion yen● Equity ratio: 59.8%

Total Healthcare Strategy➡P39

Accumulated know-how

Priority Issues (Issues of Materiality) for Proceeding with
Sustainability Management● Expertise on prescription dispensing● Know-how of establishing and operating

stores● No. of medical institutions whose

prescriptions are filled by us: 59,193
institutions● No. of agreements with local governments:

100 agreements● Membership as the activity cornerstone:
22.23 million members● Sustainability Basic

Corporate
Governance

Policy● Corporate Governance

Natural capital● Energy consumption: 314,266 thousand

kWh/yearContribution
to LocalCommunities

Solution of Social Problems● Net sales: 744.4 billion yen- Address 16 priority issues -● Operating income:Operate a wide variety of stores,
ranging from communityoriented stores to highly
specialized stores.

Operate in the fields of elderly
nursing care and nursing by, forexample, providing a home-visit
nursing service and leasing
welfare products.

Overseas operations● EBITDA: 52.1 billion yen● Net income per share: 121 yen

Reducemedical costs● ROE: 9.8%

Non-financial index ➡P59、P120

Extendhealthy life
expectancy

Contribute to
the global
environment

Healthy Community➡P63

Sustainable Business
Partnership➡P77

Contribution to the Global
Environment➡P85

Healthy Workplace
Environment

Realize the Management Philosophy

Accomplishing asociety where
everyone is happy
and full of smiles➡P93

Corporate Governance➡P103

Sustainable
Business
Partnership➡P59● Human Rights Policy

Basic Policy

Energy resources necessary
for our operations

Insurance dispensing

Provide high-quality products tooverseas markets by forming
alliances with pharmacies
operating in Taiwan, Vietnam,
and Malaysia.

HealthyCommunity

Social capital

Community-oriented
corporate activities

Operate stores in which experts,
such as beauty advisors andnationally certified dieticians,
underpin beauty and health in
the local communities.

Elderly nursing care
& nursingIntellectual capital

Financial index ➡P119

36.6 billion yen

Beauty & wellness

Manufacturing capital
Network of communityoriented stores

Value to Be Presented to Society

Various Services Provided byExperts at Physical Stores

Drugstores

Specific
healthguidance

Outcomes to Be Achieved

SUGI Pharmacy Group’s Value Creation Story

Changesin society

Increasingly serious social
problems

Healthy
Workplace
Environment

Contribution
to the Global
Environment

Engagement Management
Place a focus on dialogue with each employee to enhance their motivation● Water consumption: 755,045 m3/year

Return value
33

34

SUGI Pharmacy Group’s Value Creation Story

02
37

Market Environment

39

Organizations and Business Operations to Proceed with
the Total Healthcare Strategy

53

Financial/Non-financial Highlights

55

Message from the Chairman

In the SUGI Pharmacy Group, we are pursuing the Total Healthcare Strategy.
While taking advantage of our human capital, we are currently pushing
forward with DX and expanding our network, thereby striving to demonstrate
a further growth curve.

Strategy Implementation Framework and Group Consolidation of the Value Creation Foundation/
Companies’ Business Reports and Profiles
Commitment to Issues of Materiality

Strategy Implementation
Framework and Group Companies’
Business Reports and Profiles

Fact Data

35

36

Market Environment
What is required in addressing challenges, such as the aging and declining population and the need to reduce medical
costs, is total healthcare covering self-care, elderly nursing support, and daily life support focused on each customer.
Drugstores are experiencing accelerated digitalization in a wide variety of forms in line with changes in society. In
addition, the Ministry of Health, Labour and Welfare is promoting policies to reorganize all pharmacies into “family
pharmacies” by 2025.

2.7 trillion yen in 2000

Size of thedrugstore market*1

Specific cases
care● Better response to home-care support needs● Change in purchasing behavior of seniorcitizens● Rapid increase in self-care demand

Need to reduce
medical costs(digitalization)

Change in
consumer behavior● Integration of the physical and the digital● Promotion of 5G and enhancement of IoT● Unified and continued management of

medication information supported by ICT● Rapid expansion of the e-commerce market● Rise in health consciousness● Change in consumer behavior due to the

COVID-19 pandemic
Quick shopping in nearby areas

22.04 million in 2000

Population
aged 65+ in Japan*2

Demand in the self-care category, such as maintenanceand promotion of good health and disease prevention,and demand in the life support category, such as meals
and product sales for senior citizens, are growing
rapidly in accordance with the increase in population
aging. The drugstore industry is one of the few
growing sectors in the age of population decline.

39% (2.7 trillion yen) in 2000

External prescription rate
(Market size)

Online healthcounselingSize and share of theprescription dispensing
market for drugstores*4

1.07 trillion yen in 2020 (+9.0% YoY)

Home-visit prescription
dispensing

Product sales anddelivery of
medical supplies

Preventive carefor senior citizens

Medical care and medication category
High-level
pharmaceuticalmanagement

Medication follow-up
and polypharmacy
prevention

Delivery ofdispensed drugs

13.8％ in 2019

Trend

Rental of
welfare products

Prescription dispensing

Prescription dispensing market share:

In the prescription dispensing market, a shift frompharmacies located near medical institutions toprescription dispensing drugstores located insuburban areas is in progress following the Pharmacy
Vision for Patients, promoted by the Ministry of
Health, Labour and Welfare. This is an importantsegment supporting the growth of drugstores.

Home-visit
nursingElderly nursing support anddaily life support category

Delivery of healthBehavior change
therapeutic meals
support and healthpromotion
programs
Health promotion
apps

63% (6.1 trillion yen) in 2010

Prescription dispensing amount:

Product sales

Self-care category

75% (7.7 trillion yen)*3 in 2021

Aggravation
prevention

Online medication
support/instruction*1: Fact-finding Survey of Drugstores in Japan by the Japan Association of Chain Drug Stores*2: Press release by the Ministry of Internal Affairs and Communications*3: Progress of Separation of Dispensing and Prescribing Functions (Trend in Insurance Dispensing),
the Japan Pharmaceutical Association*4: Dorabizu on-line (Drugstore Association) Prescription Dispensing at Drugstores Exceeds 1 trillion
Yen for the First Time (Released on April 16, 2021) https://www.dgs-on-line.com/articles/877

Business Organization’s Recommendation on Ideal Visions for Pharmacies and Pharmacists

Pharmacy Vision for Patients, Promoted by the National Government

The Japan Business Federation has presented a healthcare model and recommended the use of online features so that the industry
can accommodate healthcare needs, which are expected to diversify increasingly in line with technological innovation and changes
in consumer behavior.

In 2015, the Ministry of Health, Labour and Welfare released the Pharmacy Vision for Patients in order to present the future vision of“family pharmacies” toward realizing separation of the dispensing and prescribing functions with a focus on patients. Taking advantage of the revision of the Pharmaceutical and Medical Device Act, the Ministry has also presented the course of action to reorganize
current pharmacies into “family pharmacies.”<Specific details>■ Using smartphone apps and other tools for presenting suggestions for appropriate health management■ Outsourcing prescription dispensing to highly automated prescription dispensing pharmacies■ Spreading last-mile delivery and delivery boxes■ Providing a full line of online services, ranging from counseling to medication instruction and medication follow-up■ Spreading electronic prescription*With reference to Healthcare in the Age of Society 5.0 Vol. III – Many More Healthcare Options Coming from the Use of Online
Features, Japan Business Federation

37

36.27 million in 2022

39.21 million in 2040 (estimate)Trendevaluation of the operations of handling
drugs and communicating with customers)● Outcome evaluation (health promotion andprevention of aggravation)

Prescription dispensing segment

Technologicalinnovation● Revision of dispensing fees (appropriate

13 trillion yen in 2030 (estimate)
Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles● Promotion of comprehensive community

Aging anddeclining population

Drugstore segment

Mega trend

8.7 trillion yen in 2022

2015: The Ministry of Health, Labour and Welfare released thePharmacy Vision for Patients.
・Aiming to equip all pharmacies, including those located near
medical institutions, with the functions of a “family pharmacy”

2020: It became mandatory to provide medication follow-up(revision of the Pharmaceutical and Medical Device Act).
・Providing patients with continuous medication follow-up

2021: A pharmacy certification system was introduced (revision of
the Pharmaceutical and Medical Device Act).
・Local alliance pharmacies and pharmacies allied withspecialized medical institutions

2025: All pharmacies will be reorganized into “family pharmacies.”

・High-level pharmaceutical management
・“Family pharmacy” + health support functions
2035: Pharmacies will demonstrate the “family pharmacy” function indaily living areas.
・Placing a high value on pharmacies relocated to a daily living area

38

Organizations and Business Operations toProceed with the Total Healthcare Strategy

Total Healthcare Strategy through Integration of the Physical and the Digital

Pharmacy Group

Contribute to Local Communities through Total Health Support, Ranging from Self-Care to Medical Care,
Medication, Elderly Nursing Support, and Daily Life Support
In the Total Healthcare Strategy, people’s lives, from birth until the end of their life, are divided roughly into three stages, covered by the
self-care category, the medical care and medication category, and the elderly nursing support and daily life support category. The
strategy is intended to ensure contact points with customers, regardless of their health condition, and provide optimum products andservices appropriate for the condition of customers in different stages by integrating our physical advantages with digital technology.

Elderly nursing support anddaily life support category

Medical care andmedication category

Self-care category

Drugstore operation

Treatment

Healthcheckup

Long-term elderly
nursing care

Chronic-phasemanagement

Secondary
prevention

Personal
healthrecord(PHR)(Healthy lifestyles)

P46

Comprehensive staff agency service

Elderly
nursingcarePrimary
prevention

Medical consulting

Terminal care

Kampo pharmacy operation
P51

Terminal
stage

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

Diagnosis

Hikari Pharma
Support for commencement of medical practiceOnline counseling, medical examination,and medication instruction

Fitness

Dispensing pharmacy operation
P42

Prescription
dispensing

Health checkup

Health counselingand measurement

Holdings

Medical institution support/consulting

Showing a commitment to local residents’ lifetime efforts in disease prevention and health management,

Disease prevention and health support

and contributing to their good health through a full lineup of care

Healthcare network connecting approximately 1,700 physical stores and local communities

P50

Increasing Customers’ Lifetime Value

Wholesale trade of medical
and pharmaceutical products

SWC

Promotion of disabled employment

Home-visit nursing and elderly home-care support

Increasing Customers’ Lifetime Value
We provide support tailored to the health stage of each customer, from primary prevention and secondary prevention to medical
treatment, elderly nursing care and terminal care, thereby establishing a lifelong relationship of trust and underpinning their healthy, richlifestyles and community healthcare.
In addition to in-store
prescription dispensing,
SUGI pharmacy provides
home-visit care; I enjoy
services provided athome, such as home-visit
prescription dispensing.

I’m worried about my healthcheckup results, so I consulted
about the prevention oflifestyle-related diseases anddieting and bought
supplements and health food.

Underpin customers’ healthy,rich lifestyles and community
healthcare.
Trust from customers

I consulted a pharmacist about
my child developing a sudden
fever; I’m happy that the SUGI
pharmacy in my neighborhood
was open until late at night.

Seniorcustomers

P49

Middle-aged customers

Watanabe Trading

Domestic affiliates
Affiliated company accounted for by theequity-method of the SUGI Pharmacy Group

Services

Young family customers

Prescription
dispensing

Young customers

30s

International wholesale trade

Merchandising

I am living alone for the
first time, so I bought daily
use items conveniently at astore with a large selectionof items.

20s

Domestic and international wholesale trade

40s

50s

60s

70s

Age

Overseas
affiliates

Greattree SUGI Pharmacy Hong Kong Ltd.

Expansion of needs in the healthcare category - responding to healthcare needs and daily life support needs -39

40

Organizations and Business Operations to Proceed with the Total Healthcare Strategy

SUGI Pharmacy Group Companies to Proceed with the Total Healthcare Strategy

Address Customers’ and

SUGI Pharmacy Business Report

Patients’ Anxieties andWorries at the Front Line
Support Their Safe and
Healthy Daily Lives■ Merchandising
In the merchandising field, we strengthened store openings
in areas where the flow of people and the increase in inboundtourists were prominent, and we also worked to increase
sales in urban areas, including sales from inbound tourists, byrenovating existing stores and beginning to handle new
product lines. At the same time, we aggressively renovatedexisting stores in the suburbs to acquire new customers byenhancing our product lineup tailored to meet local needs.
We also worked proactively to distribute optimal informationand coupons to individual customers using the SUGI Pharmacy app to increase the number of items purchased. As a result,
we recorded net sales of 581.4 billion yen (111.6% of theprevious fiscal year’s level) amidst the severe market environment.

Sales (Merchandizing of Sugi Pharmacy Co., Ltd.)

5,814(Unit: 100 million yen)
6000

5000

4,809

4,883

2020

2021

5,211

4,335

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

in Local Communities and

For SUGI Pharmacy’s business, this fiscal year again saw strong sales in both merchandizing and prescription dispensing.
Our further increase in the number of subsidiaries and strategic partners is leading to improvement in our healthcare network.
By expanding our store network and further enhancing our collaborative relationships, we will continue to promote the Total
Healthcare Strategy.

4000

3000

2000

1000

0

2019

2022

2023 (FY)*The merchandizing sales for FY2023 include effects of the AccountingStandards for Revenue Recognition, while those for FY2022 do not.

■ Prescription dispensing

Katsunori Sugiura
Representative Director & President
SUGI Holdings Co., Ltd
Representative Director & President
Sugi Pharmacy Co., Ltd.

41

In the prescription dispensing field, we strived to further expand
our business by opening new stores and enlarging or renovating
dispensing rooms and waiting rooms in order to respond to anincrease in the number of prescriptions to be filled.
In home-visit prescription dispensing, where the market is
expected to expand, we opened stores dedicated to home-visit
prescription dispensing and worked to create a framework that
can address community healthcare by strengthening coordination with Japan Hospice Holdings Inc., our capital and businessalliance partner. We also sought to improve the quality of ourcommunication with customers by strengthening professional
training for pharmacists, and we strived to acquire many more
expensive prescriptions to reinforce our revenue base in theprescription dispensing field. As a result, we filled 14.75 millionprescriptions (114.3% of the previous fiscal year’s level), withsales in prescription dispensing services reaching 158.7 billion
yen (111.5% of the previous year’s level).

Sales (Prescription Dispensing of Sugi Pharmacy Co., Ltd.)(Unit: 100 million yen)
2000

1,587
1500

1,327
1,052

1,424

1,175

1000

500

0

2019

2020

2021

2022

2023 (FY)42

Organizations and Business Operations to Proceed with the Total Healthcare Strategy■ Further Promotion of the Total Healthcare Strategy by Making Hikari Pharma a Subsidiary

By proceeding with the development of solution-oriented “key stores,” which underpin our strategic dominance, we place theemphasis of our store-opening strategy on the creation of hubs of healthcare networks evolving around our key stores.

In December 2023, Hikari
Pharma Co., Ltd. joined ourgroup as a subsidiary. Foundedin Toyama Prefecture in 2003,
the company is a communitybased prescription dispensing
pharmacy. Operating a total of
13 stores mainly in Takaoka City, as well as in Tonami City, Toyama
City, and Imizu City in Toyama Prefecture, and also in Kahoku Cityin Ishikawa Prefecture, the company has been supporting thehealth of local residents as a “family pharmacy” while building
strong relationships of trust with medical institutions. Striving tobecome a trusted prescription dispensing pharmacy in the
Hokuriku area, the company will contribute to further promoting
the Total Healthcare Strategy.

HospitalSports clubResearch institute(university)

Pharmacy

Healthcare network
Expanding through our physical advantages,
mainly stores, and digital technology

Key store
Health insurance
association

Home-care
support clinic■ High-Profile Stores Established in FY2023
Experimental Store Opened in Collaboration with Aisin Corporation to Enable Customers to Experience
Cutting-edge Wellness
In September 2023, we opened

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles■ Strategic Dominance of Setting Up New Branches around Key Stores

SUGI+ Haneda Innovation City

Elderly nursing service provider

Health checkup
institution

Store in Ota City, Tokyo. This is anexperimental store that provides

Local government
Municipality and comprehensive community support center*Our key stores fulfill the enhanced function of health support expected to be provided by drugstores. The stores feature a self-service space for customers to take healthmeasurements while providing a wide variety of services related to healthcare. They also have a community space where events organized by nationally certified dieticiansand other experts take place on a regular basis.

not only residents and office
workers in the area but also
many other prospective customers, such as inbound tourists andthose with disabilities, with opportunities to experience cuttingedge healthcare based on the theme “future health.” We offer a■ Increasing Customer Convenience and Satisfaction by Renovating Stores and Improving the Product Lineup

variety of unique programs and products realized through theRenovation of Stores to Enlarge Their Dispensing Rooms
and Waiting Rooms

Renovation of Sales Floors and Improvement of the
Product Lineup to Accommodate Inbound Demandlatest wellness technology.

Our store renovation has led to improvement in the waiting
environment for patients and the working environment forpharmacists and medical office workers.

By analyzing our duty-free purchase data, we have realized
sales floors that can accommodate inbound demand.

combination of traditional Japanese health techniques and theIn the experience space called “SUGI+ STUDIO,” visitors canactually try out experimental products developed by startups
and large corporations. Such items mainly include healthcare
appliances and beauty care appliances, which SUGI Pharmacy
has not handled so far.

Introduction and Enlargement of Perishable Food and Meat
Corners in Cooperation with Concessionary Chain Operators
Establishing an environment in whichcustomers with children can visit thestores without any hesitation

Total number of the stores renovated for theirprescription dispensing, merchandising, or other functions

259 stores(FY2022)43

329 stores(FY2023)

Not only are we reinforcing the lineup of frozen foods byinstalling many more freezers and refrigerators, but we arealso cooperating with concessionary chain operators in orderto address customers’ one-stop needs.

Trainee Shop Assistant, Saya+Interactive artificial intelligence (AI) developed by Aisin has
been introduced in the store. The virtual character called“Trainee Shop Assistant, Saya+” appears on a store display andchats with customers. The virtual shop assistant suggests
products for the customers based on the conversation withthem and their attributes detected by an AI camera.

44

Organizations and Business Operations to Proceed with the Total Healthcare Strategy

Strive to Serve as the Main

SUGI Medical Group’s Business Profile

Framework Underpinning
Local Healthcare by
Reinforcing the Partnership

We are working to expand our network with medical institutions and nursing care businesses, which are essential to community healthcare.
By leveraging the functions of the subsidiaries in our group, we provide the following services:with Other Companies andEstablishing andConsolidating theCommunity Healthcare
Partnership Foundation

DCP Solution Co., Ltd. (DCP)■ Support for Commencement of Medical Practice
A medical institution housed in a drugstore can benefit from the drugstore’s ability to attract many customers. To share such a benefit andunderpin local citizens’ daily lives and community healthcare, we focus on support for clinics to start their practice as one of our businessmainstays. We have assigned full-time consultants for supporting the commencement of medical practices to the four areas of Kanto, Kansai,
Chubu, and Hokuriku/Nagano, where we operate stores. We have so far provided support for the commencement of medical practices inapproximately 170 cases (including nine medical malls), an industry-leading record. In the future, we will place further focus on support for
those who wish to hand down their businesses to the next generation and on the formation of medical malls, thereby aiming to underpin
community healthcare.

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles❶ Solve management issues faced by players in the medical and nursing care fields, such as medical institutions and nursing
facilities for senior citizens❷ Solve management issues by providing our group’s know-how to prescription dispensing pharmacies and drugstores

Achieve the Ideal Medical Practice by Operating in a Drugstore

Advantage

Advantage

SUGI
Pharmacy’
store

1

3

Other
pharmacies

Local
citizenCollaboration withpharmacists and nationallycertified dieticians

Increase in profile
Monthly average of 15,000
visitors per store

Consultation on prescribed medicine,and expert consultation on concomitant
use with OTC drugs, health foods,
supplements, etc.

Hospital and clinic

Support for thecommencement and operation
Advantage

Advantage

2

4

Support for
drawing patients

Medical andpharmaceuticalproduct andmedicalequipment

AdvertisingPOP display and pamphlet setting atstores, as well as events organizedin collaboration with local
governments, businesses, etc.

Certifiedpublic tax
accountant

Financial
institution

Developer

Association with home-visit
healthcare services
Association between nursing facilities
for senior citizens and SUGI Pharmacy’s
home-visit prescription dispensing,home-visit nursing care, andhome-care support services

Support for
approximately

Shinya Sugiura
Representative Director andSenior Vice President
SUGI Holdings Co., Ltd.
Representative Director andSenior Vice President, Sugi Pharmacy Co., Ltd.
Representative Director and President
SUGI Medical Co., Ltd.

an industryleading record

Clinic mall45

170 cases,■ Support Examples

Housed in a building
in front of a station

Commercial complex

Housed on the second floorof one of our drugstores

Housed on the property of
one of our drugstores

46

Organizations and Business Operations to Proceed with the Total Healthcare Strategy

MCS Co., Ltd.
Focusing on the recruitment of medical professionals such as doctors and pharmacists, we help businesses solve their humancapital problems.
Our experienced personnel and HR consultants provide total support from the perspective of human assets, including support
for recruitment of new graduates and mid-career workers, career development, and various kinds of training, so that the clients can
expand their operations. For individuals who wish to develop their careers, we offer a wide range of support, from support to findthe most suitable job to support to return to their original work.

● Support for HR development training● Training for experts, such as

pharmacists, registeredpharmaceutical distributors, andmedical office workers● Hospitality etiquette training● Career consulting support● Support for lifelong learning forpharmacists (to be certified as
Training-Certified Pharmacist andupdate the certification)● Recruitment service

Recruitment

Development

PlacementHRsolution

Rewards● MEO support● Online advertising support

Assessment

Doctors, pharmacists, nurses,
registered pharmaceutical
distributors, medical office
workers, headquarters staff, etc.
● Personnel dispatch service● Alumni community support● Support for recruitment of new
graduates● Support for the introduction ofassessments such as aptitude
tests

websites for professionals in
the medical industry to find
new jobs or new staff

SWC Co., Ltd.

● We are a wholesaler mainly dealing in generic drugs, which play an important role in controlling national medical expenses.
● To achieve efficient logistics that takes the SDGs into consideration, we work in cooperation with medical institutions andpharmaceutical manufacturers.
● For the products that we handle, we are fully informed by their makers to ensure their quality.

Manufacturer

Medical institution

Carefully selected manufacturer

Pharmacy

Order

SWC

Order

Efficiency

Efficiency

Delivery

Delivery

Listen to clients carefully to identify their issues and propose the most appropriate services
Research

Human resources design

Execution support

SUGI Nursing Care Co., Ltd.

CoMediCs Co., Ltd.
By supporting medical and nursing care businesses, mainly through consulting services that utilize the knowledge and know-how
of the SUGI Pharmacy Group, we help solve social issues and contribute to local residents’ healthier lives.

■ Conceptual Image of Support■ Support Programs
Field

Medicalinstitution

Pharmacy

Item

Nursing facility
for senior citizens

Local alliance support

Consulting
Support for
medicalinstitutions

Human
asset

Know-how

Skill

Support for establishing branches
and expanding operations
Support for administration
operations (receipt claim andmedical material management)

Operation on
consignment

Expertise

Support for medical office workers
and managers’ operations
Support for the introduction ofpharmacies specializing inhome-visit prescription dispensing

Support forpharmacies

Consulting

Local alliance support
Support for training for pharmacists
and medical office workers
Support for receipt claim processing■ Support Flow
Interview andon-siteinspection

47

Analysis

Proposal

Service provision
Execution
supportStrategy Implementation Framework and Group
Companies’ Business Reports and Profiles

Operates the Cadical

Career Support for Everyone in the Medical Field

SWC

Support for
nursing carefacilities forsenior citizens

Consulting

Support for drawing nursing carefacility residents
Medication support

Nurses, physical therapists, occupational therapists, etc. visit those who require nursing care at home and in-home patients toprovide support for their daily lives as well as medical care and rehabilitation.
Located at the Hayashiji Store of SUGI Pharmacy, we established a home-visit nursing station in 2008 and a care planning centerin 2012 to launch services underpinning home healthcare together with pharmacists. We currently have 22 offices in Osaka, Aichi,
Kanagawa, and Chiba prefectures.

■ Main Services■Observation of illness
Check service users for their health conditions, such as illnesses anddisabilities, through their blood pressure, temperature, pulse, etc.
■Assistance with daily living
Provide support with daily activities such as toileting, bathing, and eating.
■Medical treatment as instructed by doctor
Provide services such as preventing and treating bedsores,
managing catheters, and giving IV drips.
■Management of medical equipment
Manage home oxygen, suction machines, artificial ventilators, etc.
■Home-visit nursing for infants
Provide nursing care and rehabilitation for babies from 0 years old.
■Home-visit rehabilitation
Provide various kinds of training, including swallowing training, contracture
prevention, walking training, and independent excretion training.
■Terminal care
Provide support for service users to spend their final days peacefully
at home and share their final moments.
■Support for families
Provide service users’ families with consultation and guidance
regarding nursing care, elderly nursing support and daily life
activities, as well as with psychological support.
■Support for the use of nursing care insurance
Support service users with the procedure of using nursing careinsurance and create care plans.

Home-visit nursing station Care planning center

16 stations

6 centers

We help those with illnesses or disabilities maintain their own
lifestyles without worries in their familiar communities or homes.
We also provide care for children and the disabled and offer
advice and support to the families who care for them.

48

Organizations and Business Operations to Proceed with the Total Healthcare Strategy

Overseas Partner Companies to Proceed with the Total Healthcare Strategy

S Trading’s Business Profile
S Trading/Watanabe Trading

Ulan Bator

Group’s Partnerships Spanning Asian Countries

Japan

Existing export
destinations
Taiwan, Vietnam, Malaysia,
Thailand, Hong Kong,
Macau, China (cross-borderEC), Cambodia, Nepal,
Singapore, Korea,
Mongolia, and Kyrgyzstan

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

S Trading Co., Ltd. is a trading company founded in 2020 to expand the SUGI Pharmacy
Group’s network both domestically and internationally. Operating mainly in Asia, weare expanding our business into the field of Asian pharmacy and drugstore chains byutilizing the SUGI Pharmacy Group’s network. We carry out transactions in Asian countries, where we are expanding our suppliers and other business partners by leveraging
SUGI Holdings’ network. This expansion enables us to provide products and develop
business in consideration of local needs. We are looking not only at Asia but also at the
Middle East and Africa.

TaiwanHong Kong
Vietnam■ Major Operations

Thailand
Import/export intermediation
Sharing of extensive sales know-how in the drugstore businessWe have sales know-how cultivated by the SUGI Pharmacy Group in the

Malaysia

drugstore business. We act as an intermediary in imports and exports while
sharing knowledge to effectively introduce products to the market andstrengthen their competitive edge in sales promotion.

JakartaIn the SUGI Pharmacy Group, we work with companies
featuring high-level expertise and advantages to realize
mutual cooperation and joint creation, thereby promptly andorganically connecting physical and digital contact points
with customers. We are proceeding with the Total Healthcare
Strategy, designed to contribute to improving local residents’
health through our commitment to their lifetime efforts
toward disease prevention and health management.

OEM/ODM
Support for planning and development of original products,
and their sales
We support the planning and development of original healthcare products,

SUGI Wellness’s Business Profile
Integration of the Physical and the Digital
to Realize Effective Preventive Services

beauty items, and daily use items and sell them through our group network.
This know-how enables highly unique products to be provided and brandvalue to be enhanced.

■ Achievements and Examples
Store development
We partner with overseas leading drugstore operators and work closely with local staff toprovide accurate product information for local customers. In addition, some of ourpartner companies are licensed to use the SUGI Pharmacy Group’s trademark, allowing
them to conduct store sales operations using in-store sales campaign items that arefamiliar in Japan. We can also help with product development that incorporates local
feedback.

In March 2024, SUGI Wellness Co., Ltd. was established through an incorporation-type company split from Sugi Pharmacy Co., Ltd.
SUGI Wellness aims to accelerate the integration of the physical and the digital and develop even more effective preventive services,such as remote health guidance, health management support through a PHR app, and early detection of disease risks through data
analysis. We strive to strengthen the area of primary prevention/secondary prevention in the Total Healthcare Strategy.

■ Insurance Business Support Services for Insurers and Companies

Specific health guidance
Program for those who are highly
likely to develop lifestyle-relateddiseases to review their lifestyles

Health guidance to prevent
disease aggravation

Risk report

Six-month health guidance
program to prevent lifestyle-related diseases from becoming
severeProvision of our original healthinformation so that readers caneasily understand disease risks
and how to prevent diseases

Notification to encourage
self-medication
Notification to encourage aconversion from a prescription
drug to a switch OTC drug

Promotion through social media
With the cooperation of our partner companies, we can disseminate information by
utilizing our network covering local influencers. This leads to timely campaigns based on
the latest information and cost-effective advertising, resulting in a profit increase.

49

50

Organizations and Business Operations to Proceed with the Total Healthcare Strategy

Product development

NIHONDO’s Business Profile

Product logistics

In addition to planning and developing our own products, we also
cooperate with various companies in product development.
Utilizing the know-how of Kampo and medicinal food that has beencultivated since our founding in 1969, we are engaged in productdevelopment and recipe supervision using oriental ingredientsunique to NIHONDO and cooperate in planning sales promotions.

NIHONDO Co., Ltd.

To make Kampo medicinal cuisine more accessible to everyone, wedevelop porridge and other items as consumer products. We sellthem through various channels, including supermarkets and convenience stores.

<Product examples>

Proposal of Optimal Regimen and Choice of Kampo Medicine Tailored to Each Individual
NIHONDO is a leading Kampo counseling pharmacy with 16 stores nationwide. Based on our basic philosophy of “Yojo First, Kampo
Second,” we propose the optimal regimen and choice of Kampo medicine tailored to each individual and handle a total of 94,000
physical and health-related consultations each year. With a Kampo counseling pharmacy with the three business formats of
NIHONDO KAMPO BOUTIQUE, KAGAE KAMPO BOUTIQUE, and NIHONDO at the core, we conduct a wide range of businesses
centered on Kampo medicine, including web media, a museum, product development, a Kampo school, commodity distribution,and supervision of books. Based on our knowledge and experience regarding Kampo medicine, which we have gained fromhandling the highest number of cases in Japan, we have earned the trust and respect of local residents.

School operations
NIHONDO Kampo School (Tokyo/Osaka)

Acquisition of Full Ownership
In December 2023, the SUGI Pharmacy Group acquired full ownership of NIHONDO Co.,
Ltd. We will develop highly original products that utilize NIHONDO’s expertise in thefield of Kampo medicines, develop new business formats for SUGI Pharmacy Group’s
stores, strengthen sales of OCT Kampo medicines, and promote demand for prescriptions, including those for prescription Kampo drugs. To increase the profile of SUGI
Pharmacy’s Kampo medicines, we will promote Kampo training for our group employees and disseminate information through various media. We will work to createsynergies with NIHONDO.

Supervision (of restaurants, books, etc.)

Based on the theme “daily Kampo and regimen to ensure and maintainyour health for yourself,” we have established our school in Tokyo (Aoyama)
and Osaka (Umeda). The school features pharmacists, traditional Chinese
physicians, and instructors with a lot of clinical experience obtained byworking at stores. We offer awide range of seminars, including one-day seminars
where participants can learn
the basics of Kampo, medicinal foods, acupressure points,
and tongue inspection, as well
as full-fledged courses designed for participants toobtain qualification as a
Kampo regimen instructor.

NIHONDO KAMPO BOUTIQUE■ Business Operations
Kampo store operation

We are engaged in supervision in a wide range of genres centeredon medicinal cuisine and Kampo, including supervision of themenu for the medicinal cuisine restaurant 10ZEN and cooperationin supervising books. We actively provide information that is usefulfor daily life, including not only on Kampo but also on diet, lifestyle
habits, and acupressure points.

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

・Karada Meguri Tea Series and Dragon
Boost (Coca-Cola Japan Co., Ltd.)・Shoku-Yoji Curry (Morishita Jintan Co., Ltd.)・NIHONDO Cough Drop (Lion Confectionery Co., Ltd.)・Kirei Sojun Tea (three-way collaboration
involving Ahn Mika and Aisei Pharmacy)
And many more

We have received a lot of support from women of all ages, especially those in their 30s to 50s. We are engaged in Kampo counselingin a total of 94,000 cases per year, which enables us to gain a deep understanding of the health needs of each age group.

Number of customers bygender and age group in 2023

Women intheir 20s

Women intheir 30s

Women intheir 40s

Women intheir 50s

Women intheir 60s

Counseling
cases
No. 1

Dieting

Infertility

Fatigability

Menopause

FatigabilityCounseling
cases
No. 2

Menstrual
problems

Fatigability

Dieting

Fatigability

Dieting

Counseling
cases
No. 3

Poor
circulationPoor
circulationPoor
circulation

Dieting

Insomnia

3000

Counseling
cases
No. 4

Acne

Dieting

Infertility

Poor
circulationPoor
circulation

2000

Counseling
cases
No. 5

Fatigability

Menstrual
problems

Swelling

Swelling

Constipation

6000
Women■Men■

KAGAE KAMPO BOUTIQUENIHONDO

Based on the idea that medicine and aroma
are equally important to health, the boutiqueapproaches Kampo from the aspect of
aroma. It is a beauty brand designed to refine
the whole body both inside and outside.

NIHONDO helps customers have better daily
regimens through Kampo so that they canenhance their spontaneous healing power
toward curing their illnesses from its root
and achieving health in a true sense.

Online operations

Museum

We also focus on building relationships with customers throughonline operations, including Online Kampo Counseling, designed forcustomers to seek counseling easily from anywhere, our own EC site
NIHONDO Online Shop, and our information website Kampo Life.

We run the NIHONDO Kampo
Museum (Aoyama, Tokyo), consisting of the four facilities of aboutique, a gallery, a restaurant,
and a school. This is a complex
where visitors can experience
Kampo with all five senses.

5000

Number of people

NIHONDO KAMPO BOUTIQUE
The concept is to present Kampo in amodern way and make it more familiar tocustomers. Utilizing the wisdom of Kampo,
the boutique proposes a variety of lifestyles.

4000

1000

0
https://www.kampo-sodan.com/

51

10 20 30 40 50 60 70 80
Age group<Totaled Results>
・Many people in an extensive range of age groups are concerned about their fatigability. In addition,
many women suffer from gynecological problems, including menstrual problems, which are acommon concern among women in their teens to 40s.
・ “Poor circulation” is ranked in the top five across all age groups. It is often said that all kinds ofdisease come from poor circulation. As indicated by this, some people suffer from a disorderoriginating from poor circulation.
*Survey period: Jan. - Dec. 2023
Survey subjects: Customers who sought counseling for the first time during the survey period at stores directly
operated by NIHONDO Co., Ltd.

52

Financial/Non-financial Highlights
Financialindex

Net sales(Unit: 100 million yen)
7,000
6,000

5,423

6,028

6,254

6,676

Financialindex

7,444 *

Financial
index

Operating income(Unit: 100 million yen)
400

300

5,000
4,000

301

340

366
321

316

(Yen)
1,500
1,200

985

2,000

100

1,000

1,289

80
60

600

40

300

20

2020

2021

2022

0

2023 (FY)

2019

2020

2021

2022

2023 (FY)0Profit attributable to owners of parent
207

211

193

（％）
12.0

190

150

2020

ROE

Financial
index

11.9

(Unit: 100 million yen)
300

11.0
9.4

9.0

8.8

9.8

2021

2022

100

6.0

50

3.0

Capital investment

203

200

2023 (FY)

215

233

326

2019

Financial
index

（％）
12

2020

2021

2022

0

2023 (FY)

Financial
index

ROA
10.9

10.7

9.7

9.4

2019

2020

2021

9

3,000

6

2,000

2022

2023 (FY)

25.5

25.7

22.0

40
30
20
10

0

80

80

80

2019

2020

2021

2022

0
2023 (FY)

3,137

3,459

3,347

3,518

3,905

Non-financial
index

Number of stores(Unit: store)
1,500

1,287

1,391

1,483

1,565

1,718

1,000

500

0

2019

Non-financial
index

Total assets(Unit: 100 million yen)
4,000

10.2

23.4

80

215

100

0

23.8

80

*On March 1, 2024, we conducted a 3-for-1 stock split of common stock. The
calculation is based on the assumption that the stock split took place at the
beginning of the fiscal year ended February 2023.

Financial
index

219

2019

（％）
50

Dividend per share
Payout ratio

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

2019(Unit: 100 million yen)
200

1,196

900

*We have adopted the Accounting Standard for Revenue Recognition (ASBJ
Statement No. 28, March 31, 2020) and related guidance since the beginning of theconsolidated fiscal year. The figures for FY2023 are obtained based on the adoptionof the standard and guidance.

Financial
index

1,018

1,153

Dividend per share/Payout ratio

(Yen)
100

200

3,000

0

Financial
index

Net assets per share

2020

2022

2023 (FY)Year-end total square meters of sales floor(Unit: 10,000 m2)
100

78.1

80

2021

84.7

91.5

96.3

102.5

0

2019

Non-financial
index

2020

2021

2022

Point Membership(Unit: 10,000 people)
2,000

1,645

1,804

1,941

2,083

2023 (FY)

2,223

1,500

60
1,000
40
1,000

3
0

2019

Financial
index

2020

2021

2022

0

2023 (FY)

Financial
index

Net assets/Equity ratio(Unit: 100 million yen)
2,500
Net assets
Equity ratio
2,000

58.2

58.0

2,333
63.9

61.5

59.8

（％）
100

(Yen)
150

80

120

60

90

1,000

40

60

50

20

30

0
2023 (FY)

0

1,500

0

1,827

2,006

2,138

2,165

2019

2020

2021

2022

2019

2020

2021

2022

2023 (FY)

112

113

121
104

0

2019

Non-financial
index

Net income per share

2020

2021

2022

Number of employees(Unit: people)
20,000Total

16,464

18,177

15,000103

Partner
10,000 employees

11,467

19,078

11,7702023 (FY)

21,714
19,419

11,692

12,990

5,000

2019

2020

2021

2022

2023 (FY)

0

0

6,710

7,308

7,727

8,724

2,000 Women

2019

2020

2021

2022

2023 (FY)

6,182

500
0

2020

2021

2022

2023 (FY)No. of managers/Percentage of female
managers(Unit: people)
2,500

1,000

Full-time
employees

2019Non-financial
index

1,500

10,282*On March 1, 2024, we conducted a 3-for-1 stock split of common stock. The
calculation is based on the assumption that the stock split took place at the
beginning of the fiscal year ended February 2023.

53

500

20

No. of managers
Percentage of female managers

313

228
13.6

15.6

Men

1，692

1，451
2019

358
16.8

1，768

315

301

（％）
25
20

14.5

13.0

1，
854

2，
020

15
10
5

2020

2021

2022

0
2023 (FY)*The number of partner employees is converted into the number of 8-hour
workers.

54

Message from the Chairman
Dedication and Behavior
based on “Respect for
Each Customer in Front of
Our Eyes”– Starting Point of theManagement Philosophy

Starting from a single “family pharmacy” in Nishio City, Aichi
Prefecture, we have now developed into the SUGI Pharmacy
Group, which is taking strides toward realizing the Total
Healthcare Strategy both domestically and internationally.
To serve as the main framework underpinning local healthcare and address social problems, the SUGI Pharmacy Groupwill continue to expand rapidly, but this expansion is neverallowed to be reduced to simply “swelling.” We must ensure
sound growth.
All the more for this, it is important to become further
aware of “contribution to local communities” as our raisond’être. Guided by the Management Philosophy, we need toalways return to the basics when making decisions andtaking action. Continuing to share this importance with all
38,000 employees and improve their decisions and action
based on the Code of Conduct below constitutes thelargest part of my assignments today.

SUGI Pharmacy Group’s Code of Conduct
Since our establishment, we have continued to respect thetenets “sincere, kind services” and “respect for eachcustomer in front of our eyes.” The following Code of
Conduct, established as Our Pledge, is intended for eachand every employee to be always aware of and refer backto.

Eiichi Sakakibara
Representative Director &Chairperson
SUGI Holdings Co., Ltd.
Representative Director &Chairperson
Sugi Pharmacy Co., Ltd.

55

Commitment to Strengthening
Governance to Develop intoa Sustainable Company
In addition to the penetration of the Management Philosophy
and the Code of Conduct and the pursuit of immutability as anelement of the so-called “immutability and fluidity,” thereinforcement of corporate governance is another major partof my responsibilities.
To create a future toward the 50th anniversary, which we willcelebrate shortly, and even toward the 100th anniversary, as
well as to make a sustainable contribution to local communities and society, we need to identify management risks from asuper-long-term perspective, reinforce our governance framework, and consolidate the foundation for long-term growth.

Strategy Implementation Framework and Group
Companies’ Business Reports and Profiles

SUGI Pharmacy Group’s

To contribute to local communities through SUGI Pharmacy’sfunctions of merchandizing and prescription dispensing, theSUGI Pharmacy Group will continue to expand the area inwhich it operates stores. The successive addition of newcompanies, such as Hikari Pharma, a dispensing pharmacy
chain operator in the Hokuriku region, and NIHONDO, aleading Kampo counseling company, to our group will spur ourcommitment to local contribution. In addition, we haveestablished new companies to take on new business operations, such as overseas expansion. With both our domestic andinternational partner companies increasing, we will continue
to implement various forms of alliance and cooperation
toward accomplishing our mission.

While increasing the number of outside directors and auditors
to strengthen our monitoring system and auditing function,
we will carefully eliminate on-site risks. At the same time, wewill continue to place a focus on each employee and listen to
their voices to proceed with engagement management, whichemphasizes employees’ motivation, and respect diversity. In
the SUGI Pharmacy Group, we intend to provide informationand services tailored carefully to each customer and patient
based on the important information given by them. To that
end, we will take full measures, including training programs,
for information security management. To proceed withsustainability management, the SUGI Pharmacy Group has set
a wide variety of priority issues (issues of materiality), such as
climate change and disaster countermeasures. By addressingthese issues, we will build a system that can respond to any
change.
We will continue to make every effort to contribute to local
communities by sustaining healthy growth, not simply“swelling,” and improving our corporate value.

“We will always make decisions and take action from
customers’ perspectives.”“We will always keep our eye on changes both inside andoutside the company and continue to innovate.”“We will always expand and deepen our capabilities andgrow together with the company.”“We will always remain sincere.”“We will always respect diversity.”

56

SUGI Pharmacy Group’s Value Creation Story

03
59

Priority Issues (Issues of Materiality) for Proceeding with Sustainability Management

61

Five Themes and Priority Issues (Issues of Materiality)

63

Healthy Community

five themes and 16 priority issues (issues of materiality).

77

Sustainable Business Partnership85

By implementing specific initiatives based on this,Contribution to the Global Environment

93

Healthy Workplace Environment

103

Corporate Governance

To proceed with sustainability management, the SUGI Pharmacy Group has clarified

we aim to contribute to the sustainable development of local communities.

Strategy Implementation Framework and Group Consolidation of the Value Creation Foundation/
Companies’ Business Reports and Profiles
Commitment to Issues of Materiality

Consolidation of
the Value Creation Foundation/
Commitment to Issues of Materiality

Fact Data

57

58

Priority Issues (Issues of Materiality) for

Proceeding with Sustainability Management

As a corporate group closely related to the lives of people in local communities, we believe that we can achieve sustainable corpo-

Process for Identifying Priority Issues (Issues of Materiality)

rate growth by exercising the Management Philosophy to solve social issues and contribute to the establishment of a sustainable
society.

We have identified our priority issues (issues of materiality) through the process below. We will flexibly review them as necessary,in accordance with changes in our business and the external environment.

In 2021, we reviewed our priority issues (issues of materiality) and specified five themes.

Sustainability Basic Policy
The SUGI Pharmacy Group aims to contribute to the sustainable development of local communities through cooperation
with stakeholders in order to realize a vigorous society by seriously addressing a wide variety of environmental and social
issues and increasing the number of healthy and energetic people through corporate activities.

Five Themes and 16 Priority Issues (Issues of Materiality)● Improvement of access to reasonable and quality● Health education and support for patients in thecommunity● Improvement of therapeutic effects for patients● Establishment of a robust society in terms of disaster risk

reduction and crime prevention● Contribution to rich lifestyles

through productsFirst, we clarified our challenges based oninterviews with the heads of departments
and directors in charge, as well as on
opinions from external specialists. Then we
reviewed the priority issues while referring to
the guidelines on sustainability (GRI, SASB),
the SDGs, ESG rankings, and the efforts byrival companies at home and abroad. In thereview process, we took into consideration
the Management Philosophy, the Sustainability Basic Policy, etc.

We considered the order ofpriority based on the opportunities, risks and major
efforts for each priority issue
from the perspectives of
economic value and social
value, and then we created amateriality matrix.

Confirmation of
the feasibility
After the Board of Directors
confirmed the feasibility, we
finalized the five themes
and 16 priority issues (issuesof materiality).

● Maintenance of product● Personal information protection andsafety and security

enhanced information security● Reinforcement of corporate
governance● Establishment of a

HealthyCommunity

responsible supply chain
management framework

P63−76High● Maintenance of product safety and● Improvement of access to reasonable and● Health education and support for● Ensured safety in medical care and proper

security

patients in the community

Sustainable
Business
Partnership

Corporate
GovernanceContribution to
Local Communities

Healthy
Workplace
Environment

Contribution
to the Global
Environment

P93−102

P85−92● Human asset development● Reform to realize healthy and safe working styles● Utilization of diverse human assets

59

P77−84● Realization of a carbon-free society● Realization of a recycling-based society● Reform to realize healthy and safe

working styles● Establishment of a robust society in terms of disasterrisk reduction and crime prevention

Importance for societyP103−116● Realization of a carbon-free society

quality healthcare services

management of medical andpharmaceutical products

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

healthcare services● Ensured safety in medical care and proper
management of medical and pharmaceutical products● Improvement of convenience in everyday life andsupport for the community

Consideration of
the order of priority

Selection of priority issues● Improvement of convenience in everyday

life and support for the community● Reinforcement of corporate governance● Personal information protection andenhanced information security● Improvement of therapeutic effects● Contribution to rich lifestyles through● Establishment of a responsible supply● Human asset development

for patientschain management framework

products● Realization of a recycling-based society● Utilization of diverse human assets

MiddleImportance for the SUGI Pharmacy Group

High

60

Five Themes and Priority Issues (Issues of Materiality)
Themes and issues of priority
Improvement of access to reasonable andquality healthcare services

Opportunities and risks
Opportunity Acquisition of growing markets
Risk

Customer defection

Healthy Community

Ensured safety in medical care and proper
management of medical and pharmaceuticalproducts

Opportunity Increase in customer satisfaction

Improvement of convenience in everyday lifeand support for the community

Opportunity Acquisition of growing markets / Improvement in brand value

Health education and support for patients inthe community

Improvement of therapeutic effects forpatients

Establishment of a robust society in terms ofdisaster risk reduction and crime prevention

Risk

Decline of brand value

Decline of brand value

Opportunity Increase in customer satisfaction
Risk

Decline of brand value

Opportunity Increase in customer satisfaction / Increase in dispensing fees
Risk

Reduction in dispensing fees

Opportunity Improvement in brand value
Risk

Suspension of operation due to natural disasters, etc. /Decline of brand value

Opportunity Acquisition of growing markets / Improvement in brand value
Risk

Opportunity Improvement in brand value

Establishment of a responsible supply chain
management framework

Contribution to the
Global Environment

Realization of a carbon-free society

Customer defection

Opportunity Cost reduction / Improvement in brand value
Risk

Customer defection

Risk

Cost increase due to carbon taxes /Decline of brand value

Opportunity Improvement in brand value / Cost reduction
Realization of a recycling-based society

Risk

Decline of brand value

Opportunity Inspired innovation
Healthy Workplace
Environment

Human asset development

Reform to realize healthy and safe working
stylesRisk

Employees leaving the company / Decline of brand value

Opportunity Accelerated store launch / Inspired innovation
Utilization of diverse human assets

Risk

Corporate
Governance

Personal information protection andenhanced information security

Risk

Occurrence of risks to business continuity /Decline of corporate value

Opportunity Improvement in corporate value
Reinforcement of corporate governance● Collecting near-miss cases and sharing them

● Providing information on medical and● Improving access to products and services● Enhancing medical and elderly nursing-care● Supporting activities by local communities● Providing more information to promote● Supporting patients and their families● Improving medication adherence by providing● Improving therapeutic effects by providing● Establishing robust stores and the necessary● Supporting disaster-affected people in● Providing health-conscious products● Focusing on the development of● Establishing a product quality assurance● Focusing on the development of ethical● Managing supply chain appropriately● Promoting smooth communication with● Shifting to renewable energy● Reducing environmental impact throughfor training and framework development● Safely collecting medical and pharmaceuticalproducts and medical equipment

services for in-home patients

prevention and care
● Providing information to and raisingawareness of patients and their families
medication follow-up● Improving therapeutic effects by preventing
polypharmacy

frameworks

system● Disclosing information appropriately

Reducing greenhouse gas emissions

Occurrence of risks to business continuity /Decline of corporate value

services

pharmaceutical products using digitaltools

and organizations

information to medical institutions

local communities

high-value-added products

products

suppliers

the entire life cycle● Promoting store development aimed atconserving water resources● Promoting recycling through cooperation of the

manufacturing, distribution and sales sectors● Improving capacity development training● Actively providing opportunities for● Promoting health and productivity management● Promoting the establishment of a workplace● Promoting work-style reforms● Generating opportunities with a focus on● Developing a framework that supports

for employees● Shifting to a job-focused personnel system

employees to fully demonstrate theirabilities

environment in consideration of employees’safetydiversity

Slowing store launch / Decline of brand value

Opportunity Improvement in corporate value

Risk

61

Decline of competitiveness

Opportunity Enhanced recruiting capability / Inspired innovation
Risk● Providing data-based healthcare

counseling function● Enhancing online services

Rival companies acquiring growing markets

Maintenance of product safety and security

Risk● Increasing the number of stores with aConsolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Sustainable Business
Partnership

Contribution to rich lifestyles throughproducts

Risk

Related SDGs

Major efforts

diverse working styles● Fostering a corporate culture that

respects diversity● Strengthening efforts for personal● Strengthening the information security● Improving board effectiveness● Providing thorough compliance training● Strengthening the risk management

information protection and providing
thorough training

framework and providing thoroughtraining

framework

62

Since our establishment, we have developed the drugstore model of “pharma-

Priority Issues [Issues of Materiality]

cies with the function of prescription dispensing,” aimed at contributing to local
communities, ahead of our rivals. At present, we have evolved it into a new

Healthy Community

business model covering self-care, elderly nursing care, and terminal care basedon the Total Healthcare Strategy.

Improvement of Access to Reasonable and Quality Healthcare Services●

Increasing the number of stores with a counseling function●

Platform for facing women’s latent problems and concerns and encountering new hints

In this era of digitalization, the importance of counseling by experts at physical stores is increasing. In the SUGI Pharmacy Group, we

In an era of major changes in the environment surrounding women, the number of companies and products related to “femcare”

are now working to integrate the records of each customer and patient, including their product purchase information, counselingand “femtech” is increasing. We believe that femcare needs to be recognized by all demographics, not just those with a high level

history, and information obtained through our apps. Using such information, we are striving to increase the number of stores thatof health awareness and literacy. Given the current lack of physical sales outlets, we have set up special areas in familiar,

can provide satisfactory counseling services, based on the needs and issues of each customer and patient.

easy-to-drop-in locations to introduce relevant products and provide information on women’s health issues “through people.”

Femcare“Feminine” + “Care”

Femtech“Female” + “Technology”

Products and services that help women care for their minds
and bodies in various ways (e.g. sanitary napkins and various
supplements)

Products and services that use technology to solve women’s
health issues (such as menstrual cycle tracking apps andonline pill prescriptions)

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality●

Introducing checkout shopping carts

To improve customers’ shopping experience, we have introduced checkout shopping carts
to some stores. The moment acustomer places a product in a
shopping cart, the bar code of
the product will be read. Since
this enables the checkouts byemployees to be omitted, customers can shop without
having to wait long even during
busy times.

●

Installing custom-made supplement servers

We have installed custom-madesupplement servers that reflect
the detailed knowledge of nationally certified dieticians.
Under this service, we provide
customers with only the necessary types and amounts of nutrients to address their nutrient
shortage.

●

Providing data-based healthcare services

We issue lifestyle-related disease risk reports for determining
lifestyle-related disease risks based on health checkup results.
Analyzing the probability of developing a stroke, myocardial
infarction or diabetes, such reports contain suggestions froma nationally certified dietician to prevent such onset.

Pharmacies allied with specialized
medical institutions
Local alliance pharmacies

63

3 stores21 stores
64

Priority Issues [Issues of Materiality] ｜ Healthy Community●

Serving as “local alliance pharmacies” and“pharmacies allied with specialized medical
institutions”

We have focused on serving as “local alliance pharmacies” and“pharmacies allied with specialized medical institutions.” By utilizing ouraccumulated know-how of prescription dispensing, we have increased
the number of stores providing a home-visit prescription dispensing
service. We have proceeded with the development of local alliancepharmacies that can serve as local healthcare hubs by sharing patients’detailed information with the relevant medical institutions at the timeof their hospital admission and discharge and by providing comprehensive support in the phases of elderly nursing care and terminal care.
We are also making efforts to create “pharmacies allied with specialized medical institutions.” Featuring high-level pharmaceuticalmanagement functions, such pharmacies are involved in the development of specialized pharmacists in the field of oncology and work inclose cooperation with medical institutions providing specialized
medical care.
●Interview
We have a framework in which Board-certified Pharmacists ofAmbulatory Cancer Chemotherapy provide support for
outpatients who need to receive pharmacotherapy while ensuring
cooperation with their medical institutions. Such pharmacists
check whether their patients are suffering any adverse event or not
and their medication adherence in proper cooperation with their
medical institutions through tracing reports and other tools. In
addition, not only have we establisheda system in which telephone counseling is available even outside businesshours, but we also have organized
information sessions together withnursing facilities for senior citizens andother pharmacies and have built aframework for sharing patients’
medication information. I’m really Board-certified Pharmacists offulfilled at work.
Ambulatory Cancer Chemotherapy

Promoting one-to-one health and beauty solutions using a digital communication ledger

Ensured Safety in Medical Care and Proper Management of Medical and Pharmaceutical Products
Introducing an error prevention
system in prescription dispensing
Introducing Drug Station, automatedmedicine picking equipment
To pursue safety and efficiency, we haveintroduced Drug Station into large-scaleprescription dispensing pharmacies.

■ Accurate picking on the spot

Features■ No need to worry if there isany error■ Safety ensured by thechecking function

Ideal Vision of a Digital Communication Ledger
Support for each expert

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

History
AdviceService personalized for each customer
Digitalcommunication ledger

Assessment●

Enhancing the digital membership base●

The membership of our digital apps (SUGI Pharmacy app and
SUGI Smartphone Medicine Service app [Family Pharmacyapp]) comprises the base for a variety of our digitalized
healthcare services and sales promotion tailored to individual
needs. In FY2023, we focused on promoting the downloadingof each app and achieved 12.97 million downloads.

SUGI Pharmacy app

12.02 million downloads(FY2023)SUGI Smartphone Medicine Service app(Family Pharmacy app)

0.95 million downloads

Offering same-day delivery of
OTC pharmaceuticals
SUGI Smartphone Order
Last-mile delivery launched toenable customers to receive even
OTC pharmaceuticals at home●

Introducing the SUGI Shopping Ticket,
using the POSA card scheme

We have expanded the scope of the reward options for point
card members, thereby accommodating customers’ various
needs and increasing convenience.
We have also introduced aservice that allows members toshop using their points (2points = 1 yen).

Shinshu University Store, Nagano Prefecture, opened in January 2023

(FY2023)

65

66

Priority Issues [Issues of Materiality] ｜ Healthy Community●●

Responding to specialty pharmaceuticals

Specialty pharmaceuticals require special temperature
management and side-effect monitoring. This means thatvalue-added logistics, such as specialized cooling warehouses
and special involvement of pharmacists, is necessary. In the
SUGI Pharmacy Group, we have set up a specialized coolingwarehouse and have begun to fill prescriptions for specialty
pharmaceuticals at the Nagoya University Hospital Store.
●

Ensuring accuracy of ID confirmation based on
an online qualification confirmation system

Safely collecting medical and pharmaceuticalproducts and medical equipment

In line with the needs of customers and patients, we are increasing the number ofstores where infectious waste (e.g., used injection needles) is collected. To prevent
such collection from leading to needle stick
accidents, we have a framework for managing collected waste appropriately.
*We sell collection boxes to patients and collect the sold boxes.
●

Providing information on medical andpharmaceutical products using digital tools●

Providing home-visit prescription dispensing and nursing services as a framework underpinning thecomprehensive community care system“Helping local residents maintain their own lifestyles infamiliar surroundings” is the basic concept of the comprehensive community care system. To realize the concept, we
provide in-home patients with home-visit prescription
dispensing, home-visit nursing, and life support services(product sales and meal support).
Of particular notice is our home-visit prescription dispensing service by pharmacists, which we launched ahead of ourcompetitors in the industry. We strive to provide the service toa yearly total of 250,000 people by the end of FY2025, alongwith our home-visit nursing and life support services.

Home-visit Prescription Dispensing andHome-visit Nursing Services (as of February 2024)
No. of service stores
Home-visit
prescription No. of users (monthly average)
dispensing
No. of users (yearly total)
Home-visit
nursing●

Installing many more medicine pick-up lockers

Improvement of Convenience in Everyday Life and Support for the Community

250,000

Yearly total ofpeopleby the end of FY2025
Home-visit Prescription
Dispensing Service Users(Unit: people)
250,000
200,000

160,411

176,037

Target:250,000 people
189,109

150,000

601
15,759189,10916

No. of users (monthly average)

1,441

No. of users (yearly total)

17,291

100,000
50,00002021

Opening stores specializing in home-visit prescription dispensing

We have opened key-stores specializing
in home-visit prescription dispensing
and pursuing efficiency and safety. At
the Imaike-Minami Store, they have a
special space for home-visit prescription
dispensing on the second floor. On topof committing to home-visit prescription
dispensing, they are also engaged in therental of welfare products that patients
can use while they are hospitalized andeven after they are discharged from thehospital, in cooperation with nearby
hospitals.

2022

2023

2025

(FY)

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality●

No. of service stations

Target number of home-visit prescription
dispensing service users

Opening a care plan center specializing in preventive care at a SUGI Pharmacy store
We provide a service where nationally certified dieticians certified as a care manager specialize in the formulation of
preventive care plans for people certified by their municipalities as those in need of assistance. To that end, we have opened
an elderly home care support office within a SUGI Pharmacy store to formulate preventive care plans.

Imaike-Minami Store, Nagoya City, Aichi Prefecture<Office name> SUGI Pharmacy Preventive Care Management Kashiwa-Toyoshiki Store

67

68

Priority Issues [Issues of Materiality] ｜ Healthy Community●

Realizing a flexible contact with an expert at any timeTaking on the challenge of a remote customer service“Customers can flexibly contact experts that they need andreceive services through devices set up at our stores at any
time they would like to seek counseling.”
To create such an environment and increase customer
satisfaction, we are taking on the challenge of a remotecustomer service using avatars and other tools.

●

Developing a prescription dispensing
experience vehicle

We have developed a vehicle that allows people to experience
prescription dispensing work at various events. The vehicle isintended for people from young children to young adults tohave such experience so that they will become interested in
the work of pharmacists. By providing opportunities to enjoy asimulated experience of prescription dispensing, we would
like to deepen people’s understanding of SUGI Pharmacy’s
business, produce many more fans, and build long-term
relationships.

■ Reflecting customer feedback in management
The Customer Support Office of SUGI Pharmacy receives praises, inquiries, complaints, and other feedback from customers regarding our products and customer and other services through toll-free calls, online inquiry forms, letters, etc. Such feedback from
customers is shared with the relevant departments as needed, instantly, weekly, or monthly, depending on the case. The feedback
is discussed at store manager meetings attended by those in charge of store operations, sales meetings, and board meetings to
identify problems, formulate measures, and incorporate findings into training programs. We, thus, reflect customer feedback in ourmanagement. In addition, to enable customers to solve problems on their own 24 hours a day, we have introduced an AI chat botthat provides customers with quick access to our frequently-asked-questions (FAQ) section.
We also check social media posts on us, such as Twitter and Google Map reviews, to serve customers courteously and politely.

Total Number of Inquiries,
Praises and Other Feedback(Number)
120,000

106,226 108,460 109,555(Number)
6,000

Number of Praises(Number)
600

5,463

100,000

5,000

80,0004,000

60,0003,000

300

40,0002,000

200

20,000

1,000

100

0

0

2021

2022

2023 (FY)

4,437

3,372

2021

2022

450

500

2023 (FY)

400

0

355

2021

2022

Improving access to products and services■ Providing a shopping truck service

Establishing a framework underpinning local citizens’ health in every aspect

Backed by cooperation between local governments and the SUGI Pharmacy Group, SUGI Pharmacy operates shopping trucks thattravel to community centers, including those for senior citizens, to provide shopping support. By offering this service, we also strive
to contribute to encouraging senior citizens to go out and to help them acquire the habit of exercising. In FY2023, we expanded
the service area to Kanto and introduced a total of four shopping trucks.

Rental of elderly nursing support items Home-visit nursing station●

482

Home-visit rehabilitation

2023 (FY)Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality●

Number of Complaints

Supporting activities by local communities and organizations■ Donating AEDs to facilities forsenior citizens■ Striving to ensure that everybody can enjoy shopping even if they are oldor sick
Hospitality Service, a shopping support service
This service originates from a request of patients receiving medical treatment at home or nursing
facilities for senior citizens and their families who would like to have not only medicine but also
daily life items delivered. Covering a wide range of goods necessary for daily life, from sanitary
items to food, this service contributes to an even better QOL for those who cannot visit physicalstores.

69

In the SUGI Pharmacy Group, we have annually
donated AEDs to facilities for senior citizens
since FY2013. In FY2023, we donated AEDs to
43 facilities, meaning that we have so far
donated AEDs to a total of 298 facilities. We
also organize seminars for facility staff to learn
how to use the device.

70

Priority Issues [Issues of Materiality] ｜ Healthy Community

Health Education and Support for Patients in the Community●

Providing specific health guidance at stores in local communities
Specific health guidance

Health promotion seminars by the Sugiura Memorial Foundation

Provided in FY2023 forIn cooperation with the SUGI Pharmacy Group, the Sugiura Memorial Foundation annually holds seminars in operatingareas of SUGI Pharmacy nationwide in order to help local residents, including senior citizens and their families, understandabout the latest medical treatment and disease prevention and feel more keenly the importance of early detection andtreatment of disease, as well as preventive care against dementia and other geriatric diseases.

2,941 people

In-store health guidance service inwhich a nationally certified
dietician gives suggestions on theprevention and improvement of
metabolic syndrome●

Providing support for breast cancer patients

As part of the Pink Ribbon Campaign for raising the publicawareness of early detection, early diagnosis and early
treatment of breast cancer, we donated medical hair wigs to
100 breast cancer patients.

We periodically organized wig sales events at our flagshipstores. By featuring well-tuned counseling by wig makers at
the sales venues, the events helped the customers feel close
to wigs. While ensuring sales, we contributed to increasing
the QOL of patients suffering from an adverse effect ofanticancer drug treatment.

in the past 11 years

Calling for applicants on our website●

Organizing health events with nationallycertified dieticians serving as instructors

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Wigs donated toa total of approx. 1,100 patients■ Organizing wig sales events

Handling wigs at many more stores●

Organizing events on women’s health■ Background of the establishment of the Sugiura Memorial Foundation
In September 2011, when the SUGI Pharmacy Group celebrated the 35th anniversary of its establishment, the Sugiura
Community Healthcare Promotion Foundation was established, with Hirokazu Sugiura and Akiko Sugiura, who hadcommenced SUGI Pharmacy, as the organization’s founders, in the hope that they could reciprocate the support extended
by local residents so far and be of use as much as possible by contributing to society. In July 2015, the foundation wascertified as a public service corporation and renamed the Sugiura Memorial Foundation. Not only does it continue tosupport individuals and organizations that work toward realizing a comprehensive community care system, but the foundation also contributes to society extensively in the fields of dementia and preventive care.

71

72

Priority Issues [Issues of Materiality] ｜ Healthy Community●

Improvement of Therapeutic Effects for Patients●

Establishing the DI Office to improve the quality of communication with customers, increase our brand value, and strengthen governance■ What is the DI Office?
DI stands for “drug information.” The DI Office of SUGI Pharmacy collects medical information, analyzes, processes, and edits theinformation in a way that takes mainly account of those who need it, and then disseminates and stores it in an easy-to-understandmanner. The prescription dispensing and the sales of medical and pharmaceutical products are carried out by pharmaceuticalprofessionals such as pharmacists and registered pharmaceutical distributors. To support these operations, the DI Office acts as aconsultation and inquiry desk regarding response. SUGI Pharmacy, which also operates prescription dispensing drugstores with afocus on healthcare and beauty care, disseminates a variety of information in the fields of medicine, health, and beauty. Whennecessary, the DI Office conducts checks and offers advice from a pharmaceutical perspective and from the perspective of pharmaceutical affairs laws and regulations, thereby strengthening governance.

■ Providing academic support for conference
and paper presentations●

Establishing a framework for supporting
patients through Family Pharmacy Support app

Based on the cooperation between our prescription dispensing
and merchandising sectors, we have encouraged customers
who have purchased merchandise to download our Family
Pharmacy Support app, with the total number of downloads
reaching 950,000. Consequently, 110,000 prescriptions aresent per month through the app, leading to improved
convenience for patients. We will continue to reinforce thesupport framework for patients through the app.

73

Conference name
The 17th General Meeting of the Pharmacy Society of JapanThe 16th Annual Meeting of the Japanese Society for
Pharmaceutical Palliative Care and Sciences
The 17th Annual Meeting of the Japanese Society ofNephrology and Pharmacotherapy

Polypharmacy (multiple medication use causing harmful effects) is a social issue primarily related to senior citizens. To prevent this,
we are undertaking joint research with the National Center for Geriatrics and Gerontology on an operation model featuring a local
alliance involving doctors and pharmacists at hospitals and pharmacists at pharmacies. Usually, it is difficult to address polypharmacy
in outpatients and in-home patients after their discharge from hospital. By reinforcing cooperation between hospitals andpharmacies, however, we are striving to eliminate polypharmacy and consequently to increase the effectiveness and safety of
medical therapy.

Establishment of a Robust Society in Terms of Disaster Risk Reduction and Crime Prevention●

Supporting local disaster countermeasuresand disaster risk reduction efforts

We are reinforcing various initiatives to address challenges of local
communities by concluding comprehensive agreements with local
governments. For local disaster countermeasures, we provide support by offering disaster relief goods and allowing our stores to be
used as evacuation sites at times of emergency for evacuees andstranded commuters. For local disaster risk reduction efforts, we
cooperate with local communities in implementing disaster drills.

Contribution to the enhancementof community safety and security

Total number of agreements

100

Comprehensive agreement

39

Watching-over agreement

11

Disaster risk reduction agreement

42

Agreement on the environment, etc.

8Comprehensive Agreements Concluded in FY2023
Toyota City, Aichi Prefecture

Agui Town, Aichi Prefecture

Takahama City, Aichi Prefecture

Ise City, Mie Prefecture

Matsusaka City, Mie Prefecture

Fuso Town, Aichi Prefecture

Kasai City, Hyogo Prefecture

Moriguchi City, Osaka Prefecture

Tahara City, Aichi Prefecture

Gifu City, Gifu Prefecture

Higashiosaka City, Osaka Prefecture

Fuso Town, Aichi Prefecture

Shinshiro City, Aichi Prefecture

Kitanagoya City, Aichi Prefecture

Suzuka City, Mie Prefecture

Kasai City, Hyogo Prefecture

The 39th Annual Meeting of the Japanese Society for ClinicalNutrition and Metabolism (JSPEN2024)
The 33rd Annual Meeting of the Japanese Society of
Pharmaceutical Health Care and Sciences
The 29th Annual Meeting of the Japanese Association for
Disaster Medicine
The 7th Annual Meeting of the Japanese Society of GeriatricPharmacy2023 Joint Academic Conference of the Tokai Block of theJapanese Society of Hospital Pharmacists and the Tokai
Branch of the Pharmaceutical Society of Japan
Annual Meeting of the Japanese Society of Pharmaceutical
Oncology in 2023

Comprehensive agreement with Gifu City●●

Improving medication adherence by
providing medication follow-up

We have adopted a preliminary counseling style in which pharmacists provide counseling to patients when receiving prescriptions from them. Under the system, pharmacists can concentrateon communication with patients, which is their primary role. In
addition to detailed medication instruction to patients at thestore, pharmacists also provide medication follow-up during the
medication period via a smartphone app after the patients return
home, thus allowing them to deal with their problems anytime,
anywhere. In FY2023, the number of medication follow-up cases
reached 1.25 million. By reinforcing the activity, we would like toimprove medication adherence and therapeutic effects.

Performing BCP drills to prepare for large-scaledisasters

We will improve our framework to quickly establish aminimum level of environments for prescription dispensing
and merchandizing at the time of a large-scale disaster.
Recently, we have ensured that prefabricated dispensing
rooms, temporary tents, and power generators will beavailable at the time of a disaster. In the future, we will
perform drills at physical stores in cooperation with local
governments.

No. of agreements
by FY2023*The list above includes agreements on health promotion.
●

Making local contribution by stockpilingdisaster relief goods

Together with Fujita Academy, Sugi Pharmacy Co., Ltd. has
been engaged in the stockpiling of disaster relief goods at theformer Futamura Child Center, Toyoake City, as part of theactivities of a joint research seminar under community healthcare cooperation.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

As we work to improve the quality of our communication with customers, we provide support for pharmacists who can offer
high-quality services to give presentations on their achievements
at academic conferences and other opportunities. We have asystem in which pharmacists who serve as role models in terms of
their efforts to improve the quality of communication with customers give presentations at academic conferences and the presented information is shared inhouse. By taking advantage of thissystem, we strive to ensure that pharmacists working at pharmacies contribute to even better medical care.
In FY2023 (as of December 31, 2023), pharmacists and nationallycertified dietitians of SUGI Pharmacy gave 32 presentations at academic conferences. At the 17th General Meeting of the Pharmacy
Society of Japan, held at the Nagoya Congress Center on October 8
and 9, 2023, SUGI Pharmacy gave nine presentations, of which two
were selected for an Excellent Award when only four presentations
in total were awarded as such. We also co-hosted a symposium
and learned a lot together with many participants.

Major Academic Conferences where Pharmacists and Nationally
Certified Dietitians of SUGI Pharmacy Gave Presentations

Reinforcing alliance toward preventing polypharmacy

74

Priority Issues [Issues of Materiality] ｜ Healthy Community●

Installing AEDs at many more stores●

Mainly from among stores located in regions whose governments request us to install AEDs,
we select stores with frequent visits of senior citizens and other customers and install AEDs
there. The number of our stores equipped with AEDs is increasing.
As of the end of February 2024, we have installed AEDs at 282 stores (approx. 16.4% of
the total), and we will increase the percentage to 20% by the end of FY2025.

Promoting sports and forming associated alliances

SUGI Pharmacy is committed to community contribution through sports by, for example, sponsoring FC Kariya (soccer), Tokyo GreatBears (men’s volleyball), and Victorina Himeji (women’s volleyball).

[FC Kariya][Soccer class by Yoshito Okubo][Tokyo Great Bears][Volleyball class by Kana Oyama]

Current and Target Percentages of Stores with AEDs

End of February 2024: approx.
End of FY2025: approx.

●

16.4% of all stores

20% of all the stores (target)

Starting a mobile battery rental service at all stores

We have started Charge Spot, a mobile battery rental service,at all stores. At the time of power failure due to an earthquake or other disasters, we will allow our batteries to be
used free of charge, thereby contributing to establishing arobust society in areas around our stores.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality●

Receiving refugees from Ukraine

Cooperating with Obu City, Aichi Prefecture, in supporting
refugees from Ukraine, we have begun to provide employment support at the Obu Logistics Center of the SUGI
Pharmacy Group. Deeply distressed and concerned about thecurrent situation in Ukraine, we sincerely hope that people inthe country will regain safe and peaceful lives as soon as
possible. In the SUGI Pharmacy Group, we will continue tocommit to the health and safety of people in Ukraine andthose who have suffered damage.

●

Giving donations for the damage caused by the 2024 Noto Peninsula Earthquake■ Establishing a website where SUGI Points canbe redeemed as donations to support theregionThe SUGI Pharmacy Group has donated 60 million yen, including
SUGI Point donations provided from customers, to help withrelief efforts for those affected by the recent earthquake and tocontribute to realizing a recovery of the affected areas as soon as
possible.
For our SUGI Point donation campaign, which began on
January 5, 2024, we received cooperation from many customers. We sincerely pray for the speedy recovery of the affectedareas.

75

SUGI Pharmacy Official Ambassador “Suugii & Suunya”
Appearing at many public relations activities, such as the SUGI Pharmacy app, social
media, and events hosted by the SUGI Pharmacy Group, these ambassadors embody
an even more friendly corporate image.

Website of the point donation for the Noto Earthquake

Date of birth
March 8Personality
Studious and knowledgeable
Typical big brother and reliable

PastimeReading / watching sports / strolling /traveling (hot springs, and famous places
and historic sites around the world)

Suugii

Date of birth

SuunyaSeptember 1

Personality
Curious and always energetic
Lovable and friendly

Pastime
Shopping/window shopping/dancing/all sports

Dream

Dream

To be called a doctor by everyone
To build a home with a collection of many
books that he loves
To let everyone know about SUGI Pharmacy

To continue to enjoy daily life
To make the world a happy and healthy
place with her dancing
To make more friends of SUGI Pharmacy76

We will develop systems and promote initiatives to fulfill our responsibilities forPriority Issues [Issues of Materiality]

the entire supply chain. Moreover, through the procurement and development

Sustainable Business Partnerships

of safe and secure products, we will contribute to facilitating the rich lifestylesof people in local communities.

Contribution to Rich Lifestyles through Products●

Focusing on the development of high-value-added products

The SUGI Pharmacy Group will strengthen the developmentof high-quality, high-functionality, and high-value-added
private brand products that are equivalent to national brandproducts in terms of efficacy, quality, ease of use, and price.
We aim to resolve the worries and problems of our customers
through these products.
By resolving various issues (strengthening the marketing,inventory control, and quality control functions and improving the warehousing, logistics, and manufacturing functions),
we will boost product development in order to satisfy anincreasing number of our customers.

●

Stress-free“User friendly”
Economical“Reasonable price”

Trust“Safe to use”

Leading“Can solve
your problems”

Convenience“Convenience goods”

Development of middle private brand products

For the mass market, we have developed “basic”
brand products, which are general-purpose, affordable products. For niche markets, we have developed“Royal” private brand products, which have beendeveloped in line with our Total Healthcare Strategy
in collaboration with manufacturers and universities.
In addition, we have newly established a “middle”
private brand category to develop products offering
added value to meet particular customer needs, suchas time-saving features or other specific functions,based not only on customer needs, but also on
employee feedback and purchasing data.

Enough-function“Have sufficient
functions”

Classification of private brand products

New product presentation at the Haneda Innovation City Store

MiddleRoyal

Standard quality products
for reasonable prices

Products that impress withnew awareness and quality

Products that only SUGI Pharmacy can
produce by pursuing patented technologies
and functionality in coordination with
universities and other companies

Functionality and patents

Diversity

MiddlePrice appeal

Collaboration with manufacturers
through the SUGI Pharmacy network

Stable supply of high-quality
standard items to the mass market

Versatility

EPA supplement

Rich beauty cream “Cream W”

A product newly developed in FY 2023

Functionality appeal

Differentiatedprivate brands

Basic

77

Sweets to treat yourself

Royal

NEW

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Healthy and time-saving

Basic

S SELECT UV Series

LACHÉRIE

T3 Smooth & Moist

The additive-free formula reduces theburden on the skin. We also pay close
attention to ease of use.

A botanical conditioning skincare brandthat uses the power of plant-derived
ingredients to condition your skin andlead you to healthy skin.

This product uses SUGI Pharmacy’s
proprietary nano-dispersion penetration
technology SNDP®*. It fills each strand ofhair with beauty ingredients, creating an
ideal hair environment.
*Special oleophilic layer nano-coating technology

78

Priority Issues [Issues of Materiality] ｜ Sustainable Business Partnerships●

Developing unique products

Maintenance of Product Safety and Security

Based on SUGI Pharmacy’s proprietary SNDP® penetration technology, we offer T3 brand products, which bring salon quality total●care to all people who want to become beautiful.
This is a brand to propose new beauty care focusing on all body parts, the hair, nails, eyelashes, heels, lips, hands, legs, etc. The
SUGI Pharmacy Group aims to contribute to rich lifestyles of customers in each local community through the sale of uniqueproducts that it develops.



●●Establishing a product quality assurance system

We continually strengthen our quality control systems inorder to develop safe, high-quality private brand products.
Specifically, we requested that all our business partners
involved in the development of private brand products
perform self-checks based on specification documents
prepared by the SUGI Pharmacy Group, and the results wereconverted to evaluation scores. We request our business
partners to improve in any problem areas found and conduct
on-site audits to ascertain improvements. We will continue tomaintain high quality by building an appropriate arms-length
relationships with our business partners.

Developing and promoting eco-friendly products
Percentage of eco-friendly private brand products*
（％）
15

14.4
12.2
10.2

9

Developing products using FSC certified paper
3

Percentage of eco-friendly private brand products
2030 target:

30%

0

0
2020

2021

2022

2023

(FY)

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

126*Percentage of eco-friendly products to all private brand products●*A technology developed in collaboration with universities and otherorganizations, which can deliver water-soluble and high-molecularcomponents to every corner of the stratum corneum by nano-dispersing
them in oil-based and water-soluble materials

79

Collecting opinions from customers
through the SUGI Pharmacy App

Since FY 2021, we have been developing eco-friendly private
brand products. For their materials, we have adopted thosethat will help environmental preservation, such as FSC
certified paper, biomass plastic, and vegetable oil ink. Our
target is to increase the ratio of
eco-friendly products to all
private brand products to 30%
by 2030.

Prieclat, which has celebrated the fifth anniversary since its
launch, is a skincare product series that embodies our desire
to provide “skincare that makes you truly feel the difference”
under the concept of the “power of penetration derived tocreate shining skin.” With the power of penetration enabled
by SNDP® technology* that brings deep into the skin layers
various ingredients that were previously difficult to absorb,
Prieclat products help you develop moisturized, firm andshining skin. A product in the series Prieclat U, which waslaunched in April 2022, arose from the concept and keywordof “gender neutrality.” By rejecting broad categorization
based solely on gender, we offer new value based on aselection of products suited to the skin condition of eachindividual. Through such products, we will work to promote
diversity and help achieve the SDGs.

The sales results of the Prieclat U series, which
was developed under the theme of gender
neutrality, show that approximately 30% ofpurchasers are men. This tendency, which is
not observed in other basic cosmetics,
suggests that the purchasers have understood the development theme of the productquite well.

In reference to customer
feedback, such as “I wish
there was a product of thiskind” and “I want this partof the product to be improved,” we will endeavor
to develop products thatsatisfy customer needs.

●

A product developed under the theme of gender neutrality

Sales results show acceptance of theconcept

Actively collecting and utilizing customer feedback

Disclosing information appropriately

In order to ensure that our private brand products are used safely and securely, we haveincreased the number of items we provide with disclosure of ingredients, nutrients, allergens,and chemical-free status.

Men account for 30% of sales!

Establishment of a Responsible Supply Chain Management System
●

Men:

30%
Women:

70%
Gender composition of customers whopurchased Prieclat U, a gender neutral
product

Smooth communication with business partners

To achieve coexistence and co-prosperity with our business partners andaddress various social challenges, we hold briefing sessions to explain theannual policies and plans of the SUGI Pharmacy Group to our business
partners. By promoting their understanding and cooperation, we expect toreceive their support for our business, such as improvement of products andservices and streamlining of operations, as well as advancing environmental
conservation and other initiatives to realize a sustainable society.

Recently held briefing sessions to explain ourpolicies and plans to 421 attendees from 269
business partners

80Priority Issues [Issues of Materiality] ｜ Sustainable Business Partnerships

Initiatives to Address Human Rights Issues

5. Reporting contact and complaints handling (development of a relief mechanism to address human rights violations)

The SUGI Pharmacy Group conducts business activities aiming to contribute to a society full of smiles by supporting healthy and richlifestyles of people in local communities.
In order to practice its management philosophy “We contribute to local communities through our sincere, kind services; We help
many more people smile, hoping for the happiness of each employee, hoping for the happiness of each customer, and hoping forthe happiness of everybody,” the SUGI Pharmacy Group has established a human rights policy to promote initiatives to addresshuman rights issues.
*An excerpt from the Human Rights Policy is shown below:

For the purpose of preventing and correcting systematic or individual violation of laws and regulations or misconduct, the SUGI
Pharmacy Group has established an internal reporting system and operates it in accordance with applicable internal regulations.
The Group has established a compliance consultation channel as an internal reporting channel within the Group and at an external
law firm. Through this channel, employees can report their concerns anonymously or otherwise. Any disadvantageous treatment ofreporters is prohibited. Also for external stakeholders, the Group has established a customer consultation desk to secure theiraccess to appropriate relief and will create a relief mechanism for any human rights violations against all stakeholders.

3. Human rights due diligence

Having understood human rights as stipulated in the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work and having endorsed
the Guiding Principles on Business and Human Rights adopted by the United Nations and other international norms, theSUGI Pharmacy Group will implement initiatives to respecthuman rights in accordance with these international norms.
In addition, the SUGI Pharmacy Group will comply with thelaws and regulations of the countries and regions in which it
conducts business activities. If there is an inconsistency
between internationally recognized principles of humanrights and the laws and regulations of the countries andregions in which we conduct business activities, we will
explore a means to respect the internationally recognizedprinciples of human rights to the maximum extent.

Based on the Guiding Principles on Business and Human
Rights approved by the United Nations, the SUGI Pharmacy
Group will conduct human rights due diligence in order to
identify, prevent, and mitigate any adverse impact on humanrights and explain the measures it takes.
Regarding the evaluation of the supply chain (business
partners), contract manufacturers of our internally developed
products have conducted self-checks based on questionnaire
sheets in response to our request on a priority basis. We will
also implement collaborative initiatives for improvement insteps through site visits to the offices and plants of ourbusiness partners and/or audits of them.

2. Governance and promotion system

4. Engagement with stakeholders

The SUGI Pharmacy Group will promote initiatives to respecthuman rights through the Sustainability Committee, anadvisory body to the Representative Director & President.

SUGI Pharmacy Group’s internal reporting system
In order to increase the recognition and understanding of the abovementioned system, we haveensured that contact information for the system is displayed at our stores and offices, and wehave also distributed the Compliance and Disaster Countermeasure Pocket Book. By such promotional activities, we endeavor to establish a sound reporting system. The internal reporting system
was renamed “Anything Consultation Call Service for All Workplace Concerns” in FY 2021 tocreate an environment where employees feel able to use it more freely.

Closer and dependable
all the time
Serving as the source ofyour smile.

Creating an open work environment in which
employees can seek consultation appropriately
for any workplace concerns!

Harassment*
1,585
1,500

3.8％

1,483

Total numberof reports

1,254

1,483

1,000

500

832
430

Person in Charge
Representative Director & President, SUGI Holdings Co., Ltd.

Secretariat

Number of calls to “Anything Consultation Call
Service for All Workplace Concerns” (breakdown)

Fraud 1.4％

2,000

Human rights promotion system

Compliance and Disaster
Countermeasure
Pocket Book

Number of calls to “Anything Consultation Call
Service for All Workplace Concerns”(Number)

The SUGI Pharmacy Group strives to understand, address, andresolve human rights issues while maintaining ongoing
dialogue with relevant stakeholders in order to addresshuman rights issues from the perspective of stakeholders thatare impacted by them.

SUGI Pharmacy Group0

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

1. Endorsement of international norms and respect for human rights

Consultation requests
and other matters 46.9％
2019

2020

2021

2022

2023

(FY)

Lack ofcommunication

47.9％*Power harassment, sexual harassment, and other harassment

Human Resources Department /Corporate Branding Department

Department
Human Resources Department
General Affairs Department

Roles● Update and determine various operations in accordance with

the Human Rights Policy● Coordinate with lawyers and propose changes in policies andoperations based on laws

● Draft, propose, and update on a timely basis the Group’s humanCorporate Branding Departmentrights policy● Monitor the progress in and continuously promote the evaluationand operational improvement of human rights actions● Manage relationships with various stakeholders

Education Department
Product Development Department

81● Provide regular human rights education to employees● Conduct contract manufacturer survey, aggregate and evaluatedata, conduct corporate audits, and request improvements

6. Education and awareness-raising

8. Cooperation with internal and external experts

The SUGI Pharmacy Group provides all employees witheducation and awareness-raising opportunities that arenecessary for the implementation of the Policy.

The SUGI Pharmacy Group will implement the Policy, including human rights due diligence and the creation of a relief
mechanism, in cooperation with internal and external experts
and based on their expert insights.

7. Monitoring and information disclosure
The SUGI Pharmacy Group will monitor the initiatives toaddress human rights issues on an ongoing basis and correct
them as necessary. The Group will also regularly disclose
information on its initiatives to address human rights bothinternally and externally.

82

Priority Issues [Issues of Materiality] ｜ Sustainable Business Partnerships●

9. Initiatives to address human rights issues
The SUGI Pharmacy Group will focus on addressing the following issues:

83

third party any personal information without obtaining
its owner’s consent.
⑫ Securing quality and safety of products andservices and consumers’ safety and right to know
The Group will strive to improve the quality and safetyof products and services and prevent any accident inorder to secure true customer satisfaction.
In the event of any accident or problem relating to its
products and services, the Group will ascertain the facts
and act promptly regardless of the significance of thematter. In addition, the Group does not tolerate any
misrepresentation in product labeling and respects
consumers’ right to know.
⑬ Prohibition of discrimination
The Group will not in any event engage in and does nottolerate any discrimination based on race, gender,
religion, creed, nationality, bodily features, disease,educational background, age, or other unreasonablegrounds.
⑭ Prohibition of gender discrimination
The Group prohibits discrimination against minorities
in terms of sexual orientation or gender identity, suchas LGBT.
⑮ Respect for freedom of expression
The Group will not violate people’s rights to have, seek,
receive, and communicate an opinion without being
interfered with by others.
⑯ Respect for the rights of indigenous peoples andlocal residents
In conducting business activities, the Group will not
violate the rights of indigenous peoples and local
residents.
⑰ Consideration for the environment and climatechangeIn conducting business activities, the Group will consider the environment and climate change so as not toharm the environment or cause air, soil, or waterpollution.
⑱ Respect for intellectual property rights
The Group will not violate the intellectual property
rights of individuals or other companies.
⑲ Prohibition of bribery and corruption
The Group prohibits its officers and employees fromproviding or receiving gifts, loans, rewards, remuneration, or other benefits as an incentive to induce acts ofothers that fall under fraud, illegal act, or a breach oftrust, and from using delegated authority for their own
personal benefit, in the course of business activities.
⑳ Respect for human rights in the supply chain
The Group does not tolerate and will strive to prevent
any human rights violations arising in its supply chain.

The SUGI Pharmacy Group has established a Business Partner Code of Conduct. This Code of Conduct stipulates matters with which
our business partners are requested to comply in order to realize a vigorous society and contribute to the sustainable developmentof local communities by seriously addressing a wide variety of environmental and social issues and increasing the number ofhealthy and energetic people through corporate activities together with the SUGI Pharmacy Group.
We request that our business partners understand the Code of Conduct and work to comply with it.

(Excerpt from the SUGI Pharmacy Group Business Partner Code of Conduct)① Legal compliance and fair and equitable transactions
You must comply with the laws and regulations andsocial norms of each country and region. You are also
required to comply with laws, regulations, and rules
concerning abuse of superior bargaining position, faircompetition, and fair transactions and not engage in any
acts that deviate from them.
① Comply with the applicable laws and regulations andrelated rules of each country and region.
② Maintain sound and normal relationships with politicians, government agencies, and customers and do not
engage in corruption, bribery, and the provision and receipt of benefits.
③ Establish an appropriate organizational structure toprotect information assets from the threat of leakage,theft, or falsification arising from intentional acts or negligence, define the roles and responsibilities of your officers
and employees, and ensure that they perform their business duties properly.
④ Establish an appropriate organizational structure toprotect personal information from leakage or unauthorized acquisition, use, or disclosure, define the roles andresponsibilities of your officers and employees, andensure that they perform their business duties properly.
⑤ Respect the rights of customers who own intellectual
property rights. Do not engage in any acts that may
infringe the rights of third parties.
② Procurement of safe and secure products
You must provide products and services in compliancewith the laws and regulations of each country and region.
You must also pursue safety and security and strive tooffer products and services that satisfy customer needs. In
addition, take customer feedback seriously and respondto it sincerely.
① Comply with laws and regulations, quality standards,
and labeling standards concerning safety established ineach country and region in order to ensure the safety ofyour products and services.

② Strive to conclude contracts with your suppliers inadvance in a manner to ensure stable procurement at thetime of disaster.
③ Offer and disclose information on your products andservices to your customers properly and on a timely basis.
④ Respond to any inquiries from customers sincerely andreflect them in your efforts to maintain and improve thequality of your products and services.
④ Thoroughly implement environmental protection
measures
You must comply with the environmental laws andregulations established in each country and region,
conduct corporate activities in a manner friendly to theglobal environment, and contribute to the sustainable
development of local communities.
① Work to reduce greenhouse gas emissions in order toaddress the global warming issue.
② Work to ensure the sustainable use of resources, suchas saving energy and resources, recycling, and reducing
waste.
③ Work to prevent, pollution, health damage, and thelike.
④ Comply with the laws and regulations of each country
and region established in order to preserve biodiversity.
⑤ Do not handle products that use any chemicals or raw
materials prohibited by the laws and regulations of eachcountry and regions.
⑤ Contribution to local communities
You must respect the culture, religions, customs, etc., ofeach country and region and contribute to the sustainable development of local communities.
① Understand various social issues in local communities
and engage in activities to realize economic and culturaldevelopment in close collaboration with local employees
and customers.
② Do not have any relationship with anti-social forces,
organizations, or groups that pose a threat to the safetyof local communities.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality① Securing adequate wages
The Group will comply with statutory minimum wages
and will not unfairly reduce wages.
② Proper management of working hours
The Group will manage working hours and rest periods
properly and work to establish a work schedule that
does not rely on overtime hours.
③ Provision of a safe, hygienic, and healthy working
environment
The Group will strive to provide a safe, hygienic, andhealthy working environment to ensure that employees can work actively in a safe and rewarding
workplace.
④ Respect for the right to social security
The Group respects the right to social security provided
under health insurance, pension, and social welfare
programs.
⑤ Prohibition of inhumane treatment
The Group will not engage in and prohibits any
inhumane treatment of people at the workplace,including harassment (sexual harassment, power
harassment, maternity harassment, moral harassment,etc.) that gives mental distress to and offends others,
and negatively impacts the work environment.
⑥ Prohibition of forced labor and human trafficking
The Group prohibits forced labor and human trafficking.
⑦ Prohibition of child labor
The Group will not employ anyone under the legal
minimum working age.
⑧ Respect for freedom of association
The Group will not violate the freedom of associationof employees.
⑨ Prohibition of discrimination against foreign
workers
The Group prohibits discrimination against foreign
workers in terms of wages, working hours, and otherworking conditions on the grounds of their nationality.
⑩ Prevention of defamation and invasion of privacy
relating to AI and other technologies
The Group will prevent defamation, invasion of privacy,
and discrimination that go with the widespread use of
the Internet, ICT, and AI.
⑪ Protection of privacy and personal information
The Group will not arbitrary, unduly, or illegallyintervene in the private life, family, residence, orcommunication of people or disclose factual information about their private lives, non-public information,or any other information that an ordinary person
would not desire to be disclosed. In particular, theGroup will not acquire, store, publish, or provide to a

Establishment of Business Partner Code of Conduct

Operation and monitoring at business partners
Business partners are requested to understand and comply with the Code of Conduct and to ensure that their subcontractors also
understand and comply with it. Business partners are also requested to report any violation of the Code of Conduct by them or theirsubcontractor to the person in charge at the SUGI Pharmacy Group as soon as they recognize it. In this case, they are requested totake corrective measures promptly and report the correction status each time.
The SUGI Pharmacy Group may conduct monitoring of the status of compliance with the Code of Conduct by business partners
and their subcontractors. If any non-compliance with the Code of Conduct is found as a result of such monitoring, we will requestthat the relevant business partner take improvement or corrective measures.

84

Priority Issues [Issues of Materiality]

Contribution to the Global Environment

A sustainable global environment is essential for us to continue ourbusiness and store operations. Therefore, we have been promoting
environmental and other measures to realize a recycling-based society anda decarbonized society.

Realization of a Decarbonized Society

Verification tests to promote the purchase of eco-friendly products
aiming for a decarbonized society
Participating in the Challenge Carbon Neutral Consortium to address issues through supply chain collaboration
floor development to encourage consumers to actively
participate in efforts toward achieving carbon neutrality, by
analyzing changes in consumers' awareness and behavior
toward decarbonization and evaluating the effectiveness of
our measures. At the same time, they provided visitors with aplace to provide actual support through shopping to acompany that is working toward a decarbonized society.
The SUGI Pharmacy Group will continue to encourage as
many customers as possible to take an interest in environmental issues and provide them with opportunities tocontribute to the environment indirectly through thepurchase of products. We will also use customer feedback
to improve our product development.

Submission of a declaration of voluntary action for the white logistics promotion campaign

We have endorsed the purport of the “white logistics” promotion campaign advocated by the Ministry of Land, Infrastructure,
Transport and Tourism, the Ministry of Economy, Trade and Industry, and the Ministry of Agriculture, Forestry and Fisheries, and we
submitted a voluntary action declaration on August 1, 2021 to work toward the realization of sustainable logistics.

Specific actions set forth in SUGI Pharmacy’s voluntary action declaration
Action items

Details of efforts

Logistics improvement
proposals and cooperation

If there are any requests from business partners or logistics companies regarding manual unloading by truck drivers, therationalization of ancillary work, etc., we will diligently discuss the matters with them and actively propose solutions.

Introduction of reservation
reception system

The Company will reduce truck drivers’ waiting time by introducing a truck reservation reception system.

Use of pallets, etc.

The Company will reduce cargo handling time by using such items as pallets, folding containers, and returnable boxes.

Provision of receiving/shipping
information from business
partners in advance

We will secure adequate work hours for on-site workers and truck drivers to allow them to complete their workand delivery without undue time constraints in order to promote the rationalization of logistics by requesting
business partners to share quantity information and data with the distribution center in advance.

Leveling order quantity

To reduce cargo waiting time and improve operation efficiency, the Company will level out the difference inbusyness, such as by equalizing the quantity of cargo per day and month.

Promotion of documented
transportation contracts

When selecting a logistics company to contract with, the Company will promote legal compliance by mutuallyconfirming relevant laws and regulations.

Store verification tests for the GENKOTSU (Let’s all reduce CO2) Project●●

Reducing the consumption of fossil fuels

In order to reduce the consumption of fossil fuels by company
cars, we have started to introduce electric vehicles (EVs). We
will continue to expand the introduction of EVs, as well as
hybrid vehicles. We have also introduced a mechanism tomonitor the driving status of vehicles, such as sudden braking
and starting, to seek safe driving and the reduction of fossil
fuel consumption at the same time.
●● Members

Introducing energy saving equipment andreducing power consumption (energy saving)

We are working to reduce power consumption by closely
monitoring temperatures and regularly cleaning AC equipment at stores as well as the headquarters and other offices.
We have also been working to replace conventional lightingwith LEDs at all our stores since FY 2013. We will also replace
old LEDs in due course in order to reduce power consumption
and CO2 emissions further.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

We believe it is important that we provide opportunities for
consumers to expand their perspective by learning fromdecarbonization initiatives, enjoy the process of suchlearning, take such initiatives as their own matters withinterest, and work to realize a decarbonized society incooperation with businesses and government agencies. In
these verification tests, which aim to promote consumers'
behavior that leads to decarbonization (CO2 reducing
behavior), we opened a special corner in test stores during
the test period to display a collection of eco-friendly productsthat contribute to decarbonization while providing devices
and application contents to lead visitors to the special corner.
These tests were conducted to verify our product and sales●

Shifting to renewable energy

We will promote the introduction of a solar panel-based
power generation system into stores to realize the shift torenewable energy. We have planned and started theintroduction of renewable energy by using on-site corporate
PPAs (third party ownership), and the introduction is alreadyunderway in a phased manner. In order to achieve the CO2
reduction target for 2030, we will actively use not only on-site
PPAs but also off-site PPAs.

Stores with LED lighting(No. of stores)
2,000

97

98

99

99％ （％）
100

81
1,500

1,000

1,353

1,454

1,552

1,704

80

Stores

60

1,126

40

500

20

0
2019

2020

2021

2022

2023

0
(FY)

Number of stores equipped with117

solar panels(As of February 29, 2024)

Presentation photo session
Solar power generation panels installed on the rooftop of Fujimi Storein Kariya City, Aichi Prefecture85

86

Priority Issues [Issues of Materiality] ｜ Contribution to the Global Environment

Information Disclosure Based on TCFD Recommendations●

Response to TCFD recommendations

Category

We have assessed risks and opportunities that may have an impact on the SUGI Pharmacy Group in reference to, among others, the
1.5°C and 4°C scenarios identified in the IPCC’s Fifth Assessment Report, the IEA WEO NZE scenario, etc., after collecting various
parameters based on future forecasts.

Item

2030

CO2 emissions under theassumption of no positive action

225,689

Emissions when 50% reduction
in CO2 emissions per store fromFY 2014 has been achieved

141,890*An emission factor of 0.000433 (t-CO2/kWh; national average factor for
FY 2022) was used.
*A net increase of 100 per year in the number of stores is assumed.
*Electric power consumption at most recently opened stores was used.
(Electric power consumption is higher at these stores.)■ Scope of analysis
Business: Drugstore business in Japan
Scope: Stores, procurement, logistics, and consumer behavior
Period: Present through 2030

■ Adopted scenarios■ IEA WEO2022 NZE (1.5°C)■ IPCC 5th Assessment Report, etc.

Assessment results

Policies Carbon pricing
andregulations
Control of CFCs
Technology Logistics
efficiency

Risk: Expenditure will increase due to increases in production and procurement
costs of products and services throughout the supply chain.
Risk: Expenditure will increase due to the introduction of CFC-free equipment at stores.
Opportunity: Expenditure will decrease as a result of more efficient logistics.

Reputation

Acute

Customerpreferences

Risk: Sales will decrease due to a delay in the provision of eco-friendly products and services.
Opportunity: Sales will increase as we develop private brand
Opportunity: Sales will increase as we develop private brand products that meet the needs products that meet the needs for sustainable consumption.
for sustainable consumption.

EV charging

Opportunity: The frequency of visits to stores will increase as we enhance thecharging environment.

ー

Risk: Sales will decrease to a limited extent due to temporary store closures andlower customer traffic.

Risk: Sales will decrease significantly due to increases in temporary
store closures and lower customer traffic caused by physicaldamage to stores.

Drastic
increases inextremeweather

Average
Risk: AC-related expenditure will increase as the temperature rises.
Chronic temperature
Production andーprocurement■ Excerpt from business impact assessment based on
scenario analysis
Trial calculation of expenditure arising fromtransition risk (carbon taxes)
Trial calculation of the impact when 50% reduction in CO2emission from FY 2014 is achieved in 2030. The amount of carbon
taxes in 2030 is expected to be approximately 2.7 billion yen.

Response measures toward the realization ofa decarbonized society

We expect that changes in consumer preferences and behavior
will be influenced by temperature rises. If we are unable todevelop and display products that meet customer needs oreffectively market services that meet customer needs, opportunity losses may arise. On the other hand, we could take advantage of increases in opportunities if we can capture such needs.

Opportunity: Sales of disaster prevention and stockpiling-related
products will increase.
Risk: Repair expenses will increase due to physical damage to stores.

Opportunity: Sales of disaster prevention and stockpiling-related products will
increase.

We expect that various transition risks will increase. In this
scenario, we expect that countermeasures against climate-related
issues will be strengthened and decarbonization will progress. As
a result, we expect increases in expenditure due to theintroduction and higher rates of carbon taxes and the widespreaduse of renewable energy.

■ Common scenario (1.5°C and 4°C)

Risk: Expenditure will increase as insurance premiums increase in
response to increases in natural disasters.

ー

Future initiatives

We expect that physical risks, such as extreme weather, will
increase. We expect damage to store operations due to thefrequency and intensification of natural disasters caused byclimate change. As a result, we expect increases in expenditure forrepairs and decreases in sales due to temporary store closures.

ーMarket Electricity prices Risk: Expenditure will increase due to rises in electricity prices.

■ 1.5°C scenario■ 4°C scenario

Risk: The impact of carbon pricing will be limited.

Risk: AC-related expenditure will increase as the temperature rises.
Risk: Expenditure will increase as purchase costs increase due tolower production of raw materials.

Item
Amount of carbon taxes
in 2030

Business impact

Approx. 2.7billion yen*In reference to IEA WEO2022 NZE (1.5°C) P465 Table B.2, the amount ofcarbon taxes in 2030 was set at 140 dollars/t-CO2.
*The trial calculation is based on the USD/JPY exchange rate as of March
1, 2023.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Scenario analysis

Physical risks and opportunities

management of progress toward targets, materiality assessment of risks, priority setting, and the determination of
response measures to be taken before making reports andrecommendations to the Representative Director & President.
We have also established a Risk Committee within the
Sustainability Committee as a body to manage relevant risks
and execute tasks in accordance with the instructions of the
Sustainability Committee.
The Sustainability Committee is supervised by the Board of
Directors, which receives reports and issues instructions asnecessary on important matters deliberated by the Committee to ensure that its decisions are free from errors.

Strategy■ CO2 emissions (t-CO2) under the assumption of no
positive action and when targets are met

Assessment in the world of +4°C

Risk: Expenditure will increase following the introduction of carbon pricing.
*TCFD stands for the Task Force on Climate-related Financial Disclosures.
The TCFD was established by the Financial Stability Board at the requestof the G20 to discuss how climate-related information disclosures andfinancial institutions’ responses should be.

Governance and risk management
Responding to climate-related risks and opportunities is oneof the key ESG issues we should tackle with concerted
group-wide efforts. Based on this recognition, we have established a Sustainability Committee (which meets at least twicea year) as an advisory body to the Representative Director &President for the purpose of promoting sustainability
management, including the deliberation and determinationof basic policies and necessary matters relating to such
responses.
The Sustainability Committee holds meetings attended bydirectors in charge of the main divisions and conducts theplanning of measures to address climate-related issues,

Assessment
Assessment in the world of +1.5°C

Transition risks and opportunities

The SUGI Pharmacy Group endorsed the recommendations in
the TCFD’s final report in December 2021. From now on, we
will disclose information in accordance with the framework
recommended by the TCFD (governance, strategy, risk
management, and metrics and targets) and promote
initiatives on climate change issues to contribute to therealization of a sustainable society.

87

Assessment of risks and opportunities

The SUGI Pharmacy Group will implement the following measures to be able to create a sustainable society not only for society but
also for the Group itself.

Energy saving measures■ Daily operational improvements and awareness of the needfor power saving■ Introduction and replacement of energy saving equipment■ Introduction of energy management systems

Energy creation measures■ Installation of solar power generation panels owned by the Company■ Installation of on-site and off-site solar power generation panels

on a PPA basis

Other measures to reduce CO2 emissions■ Purchase of non-fossil certificates and green power certificates

Response measures toward the realization ofa recycling-based society■ Repair and reuse of foldable containers and transportationand delivery equipment■ Reuse of furniture, fixtures and equipment following store

renovation or closureof any abnormal quantity of supplies orinventories at each store and providing guidance■ Development of private brand products with eco-friendly
packaging■ Promotion of the “temaedori” (taking from the one in front)
campaign to prevent food waste■ Reducing waste by sharing information with our business
partners■ Charging for plastic bags
■ Monitoring■ Purchase of CO2-free menu services from electric power companies■ Use of EVs as company cars

88

Priority Issues [Issues of Materiality] ｜ Contribution to the Global Environment

Realization of a Recycling-based Society

Metrics and targets●■ CO2 emissions Scope 1 and 2■ Start of bottle-to-bottle, horizontal recycling of PET bottles

The current status of the SUGI Pharmacy GroupFY

FY 2015

FY 2016

FY 2017

FY 2018

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

996

1,048

1,105

1,190

1,283

1,391

1,483

1,565

1,718

123,377

129,392

119,826

120,826

117,611

126,160

135,149

138,416

To becalculated

123.9

123.5

108.4

101.5

91.7

90.7

91.1

88.4

To be
calculated

No. of stores
Emissions (t-CO2)
Average per store (t-CO2)

Resource recycling initiatives for plastics

Flow from collection to recycling

SUGI Pharmacy
RetailersCompression
processing

Recycling

Beverage
manufacturers

Collection of used
PET bottles at shops

Volume reductionResinregeneration

Used as bottlesof new products

Customers*A location-based emission factor (national average emission factor by electric power company) is used.
*CO2 emissions based on the use of gasoline by company cars are calculated on a trial basis based on the pro rata allocation of FY 2020 results using thenumber of stores (in and before FY 2020).
*CO2 emissions shown in the table above are Scope 1 and 2 emissions (emissions from the Group).
*Calculation logics for tenant shops and some offices are currently under close examination.

Deliver them to
distribution centers

Product sales■ CO2 emissions Scope 3
FY 2022 Scope 3 breakdown

Category 12
Disposal of sold products

521

Category 4
Transportation and delivery (upstream) 15,897

Category 8
Leased asset (upstream)

65

Category 3
Fuel- and energy-related
activities not included in
Scope 1 and Scope 2
21,966

Category 7
Employee commutation 10,904

The SUGI Pharmacy Group, in collaboration with its supply chain companies, started

Category 6
Business trip

collected and recycled as new PET bottles. More than 10 stores in Aichi and Saitama

Category 2
Capital goods

Category 5
Waste generated frombusiness activities
1,252

FY2022CO2 emissions（t-CO2)
Scope 3 total
1,715,396 t-CO2

Category 1
Purchased products and services

1,601,452

a bottle-to-bottle, horizontal recycling initiative in which used PET bottles are
Prefectures served as bases for PET bottle collection. Since FY 2023, stores all overJapan have participated in this initiative.
In this initiative, we install new recycling boxes at SUGI Pharmacy stores and aim
to collect used PET bottles of good quality, meaning that the labeling and the cap
have been removed and the bottle has been washed. The bottles collected at a store
are transported to a SUGI Pharmacy distribution center by a truck on the way backfrom the delivery of merchandise to the SUGI Pharmacy store. The bottles are then*Categories 9 through 11 and 13 through15 are not applicable or items that havenot been calculated.
*Category 4 is an estimate calculated
based on monthly data for a 12-month
period.
*Figures and calculation logics of all
categories are currently under close
examination.

Metrics to measure progress toward the realizationof a decarbonized society

Metrics and targets

processed for volume reduction by a company contracted for compression processing and for resin regeneration by a recycler. After that, our partner beverage manufacturers manufacture beverage products using the recycled PET bottles as theircontainers.
Going forward, we will work to improve the efficiency of the collection scheme
and reduce the cost of recycled PET resins by encouraging more supply chain companies to participate in collection.
●

Recycling resources in coordination withgovernment agencies■ Ratio of reduction in CO2 emissions (Scope 1 and 2) per

CO2 emission per store reduction targets
FY 2030

50% reduction from FY 2014

FY 2050

Net zero

Metrics to measure progress toward the realizationof a recycling-based society■ Food-loss-and-waste ratio■ Volume of plastic bags used●

A person using a “Bottle Squash”
volume reduction machine
The machine grants SUGI Pharmacy points
according to the volume of collected bottles
and automatically screens only those PET
bottles that do not contain any residue.
Customers can enjoy participate in resource
recycling. (The machine has been introduced toa limited number of stores.)

Participation in a sponge recycling program

We have participated ina sponge recycling program in collaboration
with 3M japan Limited
and TerraCycle Japan
LLC. Our stores will serveas collection bases in the
program.

store■ Ratio of reduction in CO2 emissions from our supply chain(Scope 3)■ Percentage of renewable energy■ Ratio of eco-friendly private brand products

89

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

61,758

1,581

Sold nationwide

Collecting PET
bottles incoordination with
Shizuoka City90

Priority Issues [Issues of Materiality] ｜ Contribution to the Global Environment●■ Participation in the verification tests for a medicine sheet
recycling program

Recycling
medicine
sheets!

OKUSURI SHEET RECYCLE PROGRAM

We are collecting
medicine sheets

Recycling
medicine
sheets!

*Used medicine sheets only
OKUSURI SHEET RECYCLE PRGRAM

Strengthening resource recycling initiatives for food (food loss reduction)■ Promoting temaedori (taking from the one infront)■ Strengthening the promotion of selling out offoods whose best-before date is approaching

We have been implementing the “temaedori” (taking fromthe one in front) initiative together with the government
agencies concerned and JACDS member companies.
This initiative is aimed at reducing food waste by encouraging
customers who plan to eat food right away to choose fromand purchase products in the front.
At the same time, we will promote the initiative to reduce
the food-loss-and-waste ratio
through the promotion of selling
If you eat right away,
choose products in the frontout by revising food disposal standards, the reduction of excess inPlease cooperate withventory by revising inventory standards for bread, and the optimization of inventory by introducing
automatic order placement for
Let’s all shop in a manner
friendly to the Earth aiming
for zero food waste.
food.

By introducing a closeout sticker issuing machine, we haveincreased productivity by reducing the burden of in-store
work to sell out of foods whose best-before date is approaching. Through this effort, we have strengthened the promotion of selling out of foods whose best-before date isapproaching.

“temaedori.”

Two stores of the SUGI Pharmacy Group in Yokohama City have participated as collection bases in Japan’s first consumer participation type used medicine sheet (PTP sheet) recycling program organized by Daiichi Sankyo Healthcare Co., Ltd. and started jointlywith TerraCycle Japan LLC in Yokohama City.
In Japan, approximately between 10,000 to 20,000 tons of medicine sheets are produced a year. As they are indispensable

Consumer Affairs
AgencyMinistry of Agriculture,
Forestry and Fisheries

Ministry of theEnvironment

packaging materials for pharmaceuticals, it is difficult to reduce their consumption, and their consumption is expected to increase
going forward with the advancement of societal aging. However, few consumers recognize them as a recyclable resource, and the■ Donation to food banks
We have started the donation, to food banks, of foods thatcannot be sold due to an approaching best-before date ordamaged packaging although it is safe to eat them. As thesefoods are provided
free of charge to facilities, groups, andneedy households
that need them, we
can reduce foodloss and waste
while solving social
issues.
Start of the donation of rice to Second Harvest Nagoya

collection volume is small. Therefore, unlike for PET bottles, recycling mechanisms for medicine sheets have not been established.
Pharmacy Group, we will increase the awareness of them as a recyclable resource among customers and patients and contribute to
the creation of a mechanism to recycle them as a resource.
●

Reducing the use of plastic●

We continue to charge for plastic checkout bags to reduce
their use.

No. and weight of used checkout bags
No. of used bags
(unit: 1 million bags)
Weight of used bags
(unit: ton)

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

262

144

43

65

102

2,000

1,100

328

507

800

Health × Biodiversity × Digital

We held a “SUGI Green Walk Challenge” event, whichfeatured SUGIsapo Walk, a pedometer app. We are working
on building awareness of biodiversity through donations toenvironmental groups in proportion to the number of people
who have achieved certain step counts in walking rallies andthe provision of information on endangered species ofanimals.

A reduction of about 60%●

Strengthening resource recycling initiatives for clothing and textile goods■ Recycling of used uniforms as display fixtures
The SUGI Pharmacy Group has
introduced PANEKO@, a sustainable board made from discarded
clothing. Used uniforms of store
employees are collected andrecycled as display fixtures madeof PANEKO@.

This counter has been created using
recycled boards made of uniforms
previously worn by SUGI Pharmacy
employees.

Uniform

Uniform91■ Role as a collection base for textiles and clothing

RecycleWe ran a food drive at various events that we held in coordination with government
agencies. Going forward, we will run a food drive not only at events, but also at our stores
to expand our activities so that we can work with local residents to address issues.
The SUGI Pharmacy Group will strengthen its efforts to resolve the social issues of foodwaste and poverty.
*A food drive means an activity in which people bring surplus food from their homes and donate it tolocal welfare organizations and facilities, food banks, and the like.
●

Clothing items arecollected at our stores in
Okazaki City and Chiryu
City, Aichi Prefecture.

Reducing marine plastic waste by installing
water stations

We have endorsed the “work together
to install water stations” challenge of
the Sutehaji Project, which will be
carried out by co-creation partners of
TEAM EXPO 2025 (Expo 2025 Osaka,
Kansai), and participated in the project
as a co-creation partner. Through the
installation of water stations, we aim tocontribute to the reduction of PET
bottle use and marine plastic waste.

●

Produce boards

Counter■ Running a food drive●

Reducing marine plastic waste by installingcarbonated water vending machines

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

By serving as collection bases for medicine sheets of prescription drugs and OTC pharmaceuticals sold and/or used by the SUGI

Through the installation of carbonatedwater vending machines, we will contribute to the reduction of PET bottle
use and marine plastic waste.

Visualization of water consumption aimed at conserving water resources

In FY 2022, we started the visualization of water consumption
as part of efforts to conserve water resources in our businessactivities. We will implement effective measures to conserve
water resources going forward by analyzing changes in water
consumption over time and comparing and analyzing water
consumption among different store types (in terms of sizeand services).

Water consumption*

755,045 m3 per year
*Calculated as an estimate by dividing the amount of water charge byunit charge rate (Obu City, Aichi) (FY 2022 results).

92

Considering employees as an important asset that enhances corporate value,
we are creating an environment in which employees can work energetically,
supported by a mechanism to realize diversity in their careers and work styles
and an environment in which each employee can work in good health and witha smile. Furthermore, we are promoting the development of an organizational
culture that embraces human resources with diverse backgrounds.

Priority Issues [Issues of Materiality]

Healthy Workplace Environment

Improving job satisfaction through personnel system reform

By implementing a human resource
strategy that faces each employee on
an individual basis, we aim to realize
the Total Healthcare Strategy.
Shigeki Mori
Executive Managing Officer in Charge of Human Resource Management,
Administration, and Risk Management and General Manager of Human
Resources Department, SUGI Holdings Co., Ltd.
Director and General Manager, Administration Division, Sugi Pharmacy Co., Ltd.
Representative Director & President, SUGI Smile Co., Ltd.
Representative Director & President, MCS Co., Ltd.

management under the six pillars of “personnel system,”“human resource development,” “recruitment and retention,”“compliance and corporate culture reform,” “diversity,” and“health and safety.” We work to achieve sustainable growth byrealizing the Total Healthcare Strategy, which is our groupvision, and through “kind behavior,” “contribution to local
communities,” and “happiness and smiles of employees,” which
are the tenets of the Group’s management philosophy.

FY 2024 Human Resource Strategy

Management Philosophy
Kind behavior

Contribution to local communities

1. Personnel system□ SUGI Pharmacy job-based
personnel system□ Personnel system for partner
employees□ Health and welfare benefit plans

Group Vision
Total Healthcare Strategy

2. Human asset
development□ Philosophy education□ Business leader education□ On-site education□ Development throughpersonnel changes(experience)

Peopleare assets

Happiness and smiles of employees
6. Health and safety□ Health management□ Workstyle reform□ Risk management(Safety and health / disastercountermeasures)

5. Diversity
3. Recruitment
and retention□ Recruitment of new
graduates□ Mid-career hires

・Pharmacists
・Registered pharmaceutical distributors
・Expert employees□ Retention improvement

4. ComplianceCorporate culture reform□ Compliance□ Mechanisms to listen to
employees’ voices(officers’ patrol andconsultation call service)□ Development of female
managers□ Work-life balance□ Encourage employees totake paid leave

Improving employee engagement and executing growth strategies

93

Human resource development that cares for the needs of each
employee
In order to ensure that each employee is assigned to a position where
they can demonstrate their abilities, we place the right persons in theright positions after visualizing their skills gained through education.
Our current education programs, which are uniform and stratified
programs, will be replaced with education programs that are tailored toeach employee by measuring the current level of each employee
through external assessment, in-house manual tests, etc., and teachingspecific skills that are lacking. In addition, we will work to evolve theeducation programs into ones through which each employee can feel
their growth by combining development through learning toward theacquisition of official qualifications, which is aimed at developing aculture of self-improvement, with development through personnel
changes for employees to gain experience at various stores in terms ofsize and location (suburb / urban center).
Securing human resources through recruitment and retention
We formulate human resource strategies by focusing mainly on
strengthening the recruitment of new graduates and mid-career hireswith relevant experience and preventing employee turnover. For the
recruitment of new graduates, we strengthen the recruitment ofpharmacists, registered pharmaceutical distributors, and medical office
workers, in particular to correct company-wide uneven distribution ofhuman resources across areas by strengthening the recruitment in areas
where there is a shortage of human resources. For the recruitment of
mid-career hires with relevant experience, we strengthen the
recruitment of pharmacists and registered pharmaceutical distributors
and strategically hire persons with strong expertise, particularly in suchtechnical fields as medical care, development, products, international
business, and administration to promote the Group’s growth strategy.
Also for the recruitment of partner employees, we strive to secure
excellent human resources by setting hourly wages at appropriate levels
and changing recruitment advertising media. As for the prevention of
employee turnover, we have made a significant progress over the last
five years as a result of company-wide retention activities.
Developing an open corporate culture
In FY 2023, the number of consultation requests concerning harassment
received through the consultation call service decreased by two thirds
from FY 2021. In FY 2024, we will continue to strictly deal with any
harassment and respond to all reports to the consultation call service
without exception. In order to further improve our working environment, we have strengthened measures to address long overtime hours.
In addition, as part of corporate culture reform, we have been conducting tours of all stores by all officers and an anonymous questionnairewith all employees since FY 2021. We are working to develop an open
corporate culture in which management diligently listens to the opinionsof employees and the voice of each employee reaches management.
Promotion of diversity management
Employee questionnaire survey results show that more than 90% of
store employees answered that they prioritize not only work but also
life, and more than 70% of managers answered that work-life balance isimportant for them. Many employees, whether they are general office
workers or managers, answered that they would like to work in theirlocal communities rather than work on nationwide assignment andwould like to take holidays and paid leave and work systematicallywithin their regular working hours. This shows that our challenge for the
future is to strengthen sales capability and increase productivity at thesame time as maintaining and improving employees’ motivation andengagement. Women’s empowerment is essential for us to develop
services to meet the needs of customers and patients based on diverse
ideas and from diverse perspectives. We will create a work environment
in which it is easier for women to demonstrate their abilities by enhancing employee health and welfare benefits and promoting work stylereform, and we aim to raise the percentage of female managers to 30%
by the end of FY 2029.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Having identified “employees are the most important assets,”“working to improve the job satisfaction of each employee,” and“aiming to achieve the management philosophy, growth strategy, and budget by drawing out the strengths of each employee”
as important perspectives of human resource management, theSUGI Pharmacy Group aims to become a company that isneeded for the long term by integrating them into its management strategy. And the Group promotes human capital

Based on the idea that employees are the most important assets, theGroup has been upgrading its personnel system with regard to evaluation, remuneration, welfare benefits, etc. As a result, we are steadily
making progress. For example, employee turnover has decreased byhalf compared to 2018. Job satisfaction among managers as measured
by the engagement score has exceeded the levels of other companies,
and the average job satisfaction within the Group is also rising. However, based on the judgment that we need a further personnel system
reform in order for the Group to achieve sustainable growth in an
external environment that is changing due to, among other things,
rapid digital transformation and a declining birth rate and aging
population, we have introduced a new personnel system in March 2024.
The concept of the system reform is a “transition to a SUGI Pharmacy
version of job-based personnel system.” The new system is designed toreflect the work evaluation results of each individual in their remuneration more than before. For example, a hybrid system has been
introduced for managers that allows them to be promoted not only
based on their individual ability, but also by taking on a higher role. In
addition, an expert system has been introduced for highly skilled
professionals, such as digital transformation talents, lawyers, certified
public accountants, and M&A promotion personnel, who are essential
for the expansion of our business domains. For general office workers,
we have revised allowances for store managers and pharmacists, whoare expected to play central roles in our growth strategies. Regarding
evaluation, we have clarified requirements for their promotion by
establishing grades based on their skill levels. We will continue toupgrade our personnel system going forward by listening to the voicesof each employee in order to create a system under which all employees
can work energetically.

Promotion of healthy and safe management
We are working to create mechanisms to protect employee health. For
example, we encourage employees who have abnormalities in theirhealth checkups to undergo re-examinations and arrange interviews
with occupational health physicians for them by enhancing our occupational health physician system and introducing and utilizing a healthmanagement system. As a result of these efforts, the SUGI Pharmacy
Group has been selected as an Excellent Health Management Company
for the sixth straight year. Going forward, we will promote healthmanagement aiming to obtain White 500 certification.

94

Priority Issues [Issues of Materiality] ｜ Healthy Workplace Environment

Utilization of Diverse Human Resources●

Preparing fields and opportunities with a focus on diversity

The SUGI Pharmacy Group will make serious efforts to enhance diversity and inclusion (mutual acceptance and recognition ofdifferences as strengths).

■ Introduction of a program to allow employees
to choose to live and work away from home
In FY 2022, we introduced a program to allow employees
who can work remotely to choose either to combine businesstrips with remote working or to live and work away fromhome (CHOISE). This program helps employees realize diverse
work styles that are not constrained by time and place or theirfamily relationships, which have previously been restricted byliving and working away from home, promoting the retention
and development of excellent human resources.

■ Work arrangements in anticipation of the era of
100-year life

We have 11 in-house job
coaches and 25 career counselors providing operational
guidance and daily support
to 296 employees with disabilities working at nine offices nationwide. At stores,
these employees perform
cleaning and arrange products on shelves, while at ourheadquarters, they sort articles to be sent, perform
cleaning, and ship products to support logistics.

Developing services to address the needs of diverse customers and patients based on the ideas and perspectives ofdiverse people, including female employees, is indispensablefor the sustainable growth of the SUGI Pharmacy Group.
Therefore, we are strengthening our efforts for humanresource development and improvement of the workplaceenvironment so as to increase the ratio of female managers to
30% by the end of FY 2029. Regarding human resource
development, we train employees to obtain and practice theskills needed to discover and resolve essential challenges,
communication and leadership skills, knowledge of products,
specialized and managerial knowledge, and technical skills.
Regarding the improvement of the workplace environment,
we focus on improving the benefits package and encouraging each employee to present their opinions to the Company,
thereby reinforcing support for employees, while promoting
workstyle reform aiming to provide a more fulfilling work-lifebalance.

Target:Percentage of female managers

30%

（％）
30

15.6

16.8

15

Prenatal and postnatal leave

14.5

Special leave forspouse’s childbirth

13.0

10

2020

2021

2022

2023

2029

Future initiatives toward women’s empowerment● Strengthen promotion to full-time employee● Correct the gender gap in wages● Create an environment that makes it easier to take

● Provide awareness training for managerial promotion

95

(FY)

27.9
18.2

20
10
0

2019

2020

2021

2022

2023

(FY)

Percentage of those returning to work after parenting leave
Women

Men

100
100 97.9100
100 98.6 98.9
94.7
92.6
92.5

80
60
40
20
0

2019

2020

2021

2022

2023

(FY)

Surpassing
legalrequirements!

Until April 30
immediately
following thesecond birthday

Until the end of
the third grade ofelementary school

Until the end of
the sixth grade ofelementary school

Until the end of
the third grade ofjunior high school

Extension ofparentingleave

Reduced work program for childcare
Reduced working hours program for childcare
Sick / injured childcare leave (seven days per year or 14 days per year for two or more children)● Strengthen activities to recruit women● Expand the scope of employment for women

30

Until the day
immediately
before the firstbirthdayParenting leave

50

Eight weeks
after birthChildbirth

20

43.6

Support programs that accommodate diversity
Six weeks
before birth

25

55.7

40

SUGI Pharmacy has been certified asa Platinum Kurumin business operator. This certification is granted togeneral employers who conform to
the designated standards regarding
parenting support.
In FY 2023, 525 employees (418
women and 107 men) took parenting leave, with the percentage of
those returning to work after their leave reaching 98.7% (98.6% of
women and 98.9% of men).

2.80%

53.0

50

（%）
100

■ Certified as a Platinum
Kurumin company

Percentage of disabled employees(FY 2023 SUGI Pharmacy Group)■ Increasing the ratio of female managers

We have introduced various support programs concerning pregnancy, childbirth, and childcare, aiming to create a work environment in which employees can balance work and childcare.
In addition to enhancing maternity leave and parenting leave, wehave introduced a reduced working hours program for childcare inorder to make it easier for employees to work after returning fromsuch leave. Since April 2024, we have extended the eligible period ofthese programs until children complete their third year of junior highschool. This program can be used until the child completes the sixth
grade of elementary school, which creates a work environment inwhich it is easier for employees to return to work from parenting
leave and continue to work. In order to support further empowerment of women, we also focus on raising the percentage of male
employees who take parenting leave. It has already exceeded theprevious target of 30%, and we aim to raise it further going forward.

Percentage of male employees who took parenting leave（%）
60

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

We have extended the mandatory retirement age to 65 forfull-time employees and 70 for contract employees andpartner employees. In addition, we have made it possible forthose who are 70 to 75 years old to work as senior partner
employees on reduced working hours in consideration of
their physical strengths and heath conditions.

■ SUGI Smile’s efforts■ Enhancement of maternity leave, parenting
leave, and reduced working hours program

parenting leave

Secure substitute staff from among employees
It is possible to work on the basis of mutual support across stores due toour dominant store opening (close distance between each store) strategy.

96

Priority Issues [Issues of Materiality] ｜ Healthy Workplace Environment■ Health management strategic map

Reform to Realize Healthy and Safe Working Styles●

Based on the idea that employees can feel happiness when they can work in a healthy, motivating, and lively manner, we haveformulated a health management strategic map that clarifies health management promotion activities and their indicators in orderto realize the happiness of our employees.
We believe that employees’ job satisfaction and motivation will improve further through company-wide promotion of physicaland mental health.

Promoting health management

The SUGI Pharmacy Group considers the promotion of employee health from amanagement perspective and is strategically working on health management.
The Group has developed a promotion system to work on health management,
made a health management declaration, and created a health management
strategic map. We have been certified as an Excellent Health Management
Company, the accreditation of which is given jointly by the Ministry of Economy,
Trade and Industry and Nippon Kenko Kaigi, for six consecutive years.
We are strengthening our efforts toward White 500 certification as the next step.

Health management strategic map
Healthinvestment

Lifestyle-relateddiseasecountermeasures■ Health management declaration

Health measures

Awareness andbehavior modification

Enhancement of healthliteracy training

Raising the percentage of
persons maintaining
desirable body weight

Holding company
walking events

Increasing the percentageof persons with exercise
habit

Provision of mental
health training

Percentage of training classattendees

Maintenance of physicaland mental health

Productivity
improvement

Reduction in the numberof persons with observed
abnormality potentiallyrelated to alifestyle-related disease

Number of days absent
due to injury or illness(Reduction in absenteeism)“We help many more people smile, Hoping for the happiness of each employee,
Hoping for the happiness of each customer, and Hoping for the happiness of everybody.”
MentalhealthReduction in thepercentage of highly
stressed persons
Thorough managementof working hours

Promotion ofwork-life
balance

Promotion of
women’s
empowerment

Katsunori Sugiura
SUGI Holdings Co., Ltd.
Representative Director & President

In order to further promote healthmanagement, we have adopted astructure that can make more agile
and flexible responses by appointing the President as the Chief
Health Management Officer andhaving the president of each subsidiary assume execution responsibility for promotion.

Encouraging employees
to take leave for four
consecutive days

Percentage of employees
who took paid leave

Medical checkup
assistance

Percentage of employees
who took medical checkup
in gynecology

Enhancement ofchildcare and elderly
nursing support

Percentage of employees
who work while providing
childcare and elderly
nursing care at homeregistered dietitians of SUGI Pharmacy● Health questionnaire

Chief Health Management Officer
Representative Director & President

Safety and Health Committee

Department in charge ofpromoting health management
Human Resources Department

Labor union
Execution responsibility
President of each group company

97● Specified health guidance provided byHealth insurance society

Execution responsibility
President of each group company

Execution responsibility
President of each group company

Increase in vigor,
dedication, andabsorption in work

Percentage of women
returning to work after leave
Percentage of female
managers

We are implementing the following initiatives for the maintenance and promotion of employee health:

Health management promotion structure chart

Occupational health physician

Improvement ofjob satisfaction■ Health management initiatives

internal and external audiences

Health Management Promotion Officer
GM of Human Resources Department

Realization ofhappiness for
employees

Number of persons who work
long hours among persons
entitled to overtime pay● Regular seminars on women’s health for both

■ Health management
promotion structure

Increase in productivity
at work(Reduction in presenteeism)

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

The origin of this management philosophy is to realize the happiness of ouremployees.
In other words, this is the idea that when employees can work in a healthy,
motivating, and lively manner, they can feel happiness and can also make customers in our local communities happy.
Based on this idea, we are promoting health management. As we are about toenter the era of 100-year life, working to help our employees and all other people
maintain and promote health is the mission of the SUGI Pharmacy Group, which
prides itself on being a family pharmacy in local communities.
I myself tend to lead an irregular life. Therefore, I pay attention to the threemeals and their menus every day and try to make time for weight training andwalking at least once a week. Health invites a smile. For this reason, it is essential towork to create a company whose employees are full of smiles.
Based on the understanding above, we declare that we will review the healthmanagement promotion structure from the ground up and promote the creationof a healthy work environment in which employees strive to maintain and promotehealth on their own initiative and their smiles invite the smiles of people in local
communities.

Goals● Stress checks (annual)●● Establishment of the Anything Consultation Call Service for All Workplace

Concerns to promote the early detection and prevention of issues related
to mental and physical health and the reduction of employee turnover● Encouraging employees to take leave for four consecutive days (twice ayear)● Expense assistance for cancer screening and gynecology checkup

Mechanisms to support the physical and mental health of employees

The Company established the “Mental Health Promotion Office” for employees in March 2007, a first in the industry, and the Officestarted its activities. By now, we have introduced various mechanisms in this area.

■ Establishment of a health consultation channel■ Consultation with doctors via chat or video callThis is a channel for consultation by email or telephone withexternal counselors. Employees can directly access thischannel at any time without going through the Company, sothey can use it with peace of mind.

This mechanism allows employees to easily consult doctors
on medical matters anytime and anywhere, free of charge.

98

Priority Issues [Issues of Materiality] ｜ Healthy Workplace Environment■ Conducting stress checks
In order to prevent and detect any mental health problems at
an early stage, we conduct stress checks annually. Employees
can also conduct these checks from their smartphones, allowing them to easily monitor their own stress conditions. Stresschecks are conducted to provide employees with the opportunity to notice their own stress and prevent any mental
health problems and to improve the workplace environmentthat is causing them stress, thereby creating a comfortableworkplace.

■ Establishment of “Anything Consultation Call
Service for All Workplace Concerns”

This system provides employees with opportunities to review
their current career status and develop a future career development plan to clarify their future challenges. In addition, employees can communicate through this system to the Company any
issues in the organization or store to which they belong as wellas their personal concerns and worries. Based on the answers ofeach employee, we use it for the implementation of measuresof the Company as well as for career development of employees, such as their personnel changes and training requirements.
In FY 2022, we also started to measure work engagement byusing the self-declaration system.

SUGI Pharmacy education system❸● Improve skills through the integration of programs, evaluation, and education that is tailored to each individual
Functional
qualification

SV/PSV

New store
manager training

Store manager candidate
training

・Enhancement of technical education on job positions (GM and section
manager) and job duties (roles)
・Enhancement of programs to correct individuals’ weaknesses and lackof skills

Basic

Onboarding training Onboarding training

Basic training for new employees❷● Addition and enhancement of education on expected roles
Partnertraining
focusing on
cosmetics

Beautyknowledge /skill mastertraining

Supervising
Medical officepharmacist training worker training
Onboarding
training

New medical office
worker trainingNew
employeetraining

Correspondence education E-learning

0
2019
●

Standard

New store
manager training

Partner
employees

Advanced

2020

2021

2022

2023 (FY)Foundation

Strengthening employee engagement

Basic matters, basic operations, compliance Acquisition of registered pharmaceutical distributor qualification, Caravan Mate / Dementia Supporter development
Management philosophy, corporate watchwords (kindness), and founder message Instillation of six principles for making good impressions■ Holding events for employees’ families
During the pre-opening of a new store, we invite family members of our employees to an
event to support their shopping. We hold these events so that families can learn about theenvironment in which each employee works every day and so that they become fans of SUGI
Pharmacy.

●

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

430

Model BA

New staff training

G1

Advanced BA

BA seminar

G2

832

General (SC)

Medical office
worker training

G3

Wellness advisor
development
・Advanced
・Basic・Standard

Beauty knowledge/ technical skill /customer service
skill master training

Store manager training

1,000

SV/PSV
training

Supervising pharmacist training

M1 promotion
training

1,254

Medical office
workers

Pharmacists

Supervising pharmacist candidate training

M0/M1/
E1

New
department
GM training

G4

1,500

BA

Store managers: Improve skills effectively through level-specific educational programs
Pharmacists: Provide education for early development of managers and education specific to eachstore type
Medical office workers: Accelerate the participation of new recruits in the workforce and develop
medical office workers who are registered dietitians
BAs: Develop BAs trusted by customers for their total beauty knowledge
Wellness advisors: Retain customers by differentiating customer service levels
Advanced store manager training

M2/E2

Manager training(Select individuals/ internal
development)

1,585 1,483

Store managers

Store manager candidates(including registered dietitians)❶● From omnidirectional education to education tailored to each individual’s ability
Business leader
training(Select individuals/ external
dispatch)

M3(Number)
2,000

500

Managers

Education by job duty

Officer training

M4

Annual number of calls to “Anything Consultation
Call Service for All Workplace Concerns”
Creating an open work environment in which
employees can seek consultation appropriately for
any workplace concerns!

Education by job position
Officers

Officers

Technical education

Management education

Model store manager training

We have established an external reporting channel torespond to any concerns, such as “I have a problem at thestore”; “I have something I want to talk about”; “I have something I want the Company to address”; “This is wrong”; “I
have something I cannot report to my boss and I want theCompany to address”; “I want the Company to improve thework environment”; or “I am worried about my relationships
with others.” This is aimed at fostering peace of mind in
employees as well as risk awareness that any harassment will
be subject to admonition, in order to eliminate harassment
and create good human relationships and a pleasant work
environment. Any reports from employees to the Company
are promptly addressed.

■ Self-declaration system

Promoting motivational management by visualizing performance and evaluation■ Group award program
Based on thank you messages received from customers on a daily basis, relevant employees are recognized as appropriate. In
addition, employees and stores that have delivered excellent performance by actions based on the Company’s management
philosophy are recognized at the year-end award ceremony. In FY 2023, 85 employees and 24 stores were recognized.

Human Resource Development●

Improving capacity development training for employees

Having clarified the required skills necessary for employees to acquire internal qualification or perform their duties and roles, we
provide employees with education to learn such skills and develop human resources who can demonstrate such skills in theirrespective workplaces at high levels.

■ Achievements announced at a ceremony
attended by all Group executives

Number of thank you messages received by storesand employees from customers

482(Number)
500
400

450
338

355

2020

2021

300
200
100
National competition (award) for beauty advisors to compete in theircustomer service skills

99

0

2022

2023

(FY)

100

Priority Issues [Issues of Materiality] ｜ Healthy Workplace Environment

Improving the work environment based on employee work engagement< Response measures >In FY 2022, the SUGI Pharmacy Group started to measure work engagement covering all employees in order to raise laborproductivity, reduce employee turnover, revitalize the organization, and promote employee health.

■ FY 2023 work engagement measurement results
Vigor, dedication, and absorption, which are the three elements that comprise
work engagement, were incorporated in the questions and were measured
using a question format.

FY 2024 target

3.5
FY 2023UP

3.2

FY2022

Personnel system reform● Linking roles to evaluation and remuneration● Including engagement indicators in evaluation
items
Human asset development● Clarifying skills and improving skills throughtraining, OJT, job rotation, and self-learning
Compliance and corporate culture reform● Eradicating long working hours, unpaid overtime,and harassment● Implementing officers’ visits to all stores andintroducing an employee proposal system
On-site subordinate management● Thorough training of subordinate management
techniques

Work engagement*1
survey started■ As a results of company-wide efforts focused on individual engagement

3.1

*2

Employee job satisfaction scores (motivation) are steadily increasing
The effect of implementing strategies and measures foreach department and promoting human resources strategies■ Engagement analysis
In order to raise work engagement, we have asked an external expert organization to analyze the correlation between work
engagement and various elements (working environment, etc.) and the correlation between work engagement and work
performance.

Correlation between work engagement and various
elements (working conditions, etc.) for supervising
pharmacists

Correlation between work engagement and work
performance (customer service-related additions andcosmetics sales)
High
Work performance

Correlation between
engagement and various
elements

Employees with higher
engagement have achieved
about 10% higher work
performance!

Ambition to grow< Engagement ><Motivation for
promotion>

UP

Sense of belonging<Sense of attachment
to the Company>

UP

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality*1 We have adopted the Utrecht Work Engagement Scale.
*2 Average (of vigor, dedication, and absorption measures)

Work-life balance

Age

Communication
with supervisor

Open workplace

Low
Other

Low

Engagement index

High

For example, an analysis of supervising pharmacists has revealed that openness to proposals for business operation improvement, whether your supervisor cares for your needs, and work-life balance are highly correlated with engagement (see thegraph to the left). As for the correlation with work performance, at stores to which supervising pharmacists and beauty advisors
with high work engagement belong, work performance (number of customer service-related additions and cosmetics sales)
was approximately 10% higher (see the graph to the right).
In view of the analysis results indicating that subordinates’ engagement is affected by encouragement from the supervisor
to subordinates, motivation, and the competency level of the supervisor’s management, we are implementing measures tohelp improve engagement.

101

102

To become a company needed by society, the Company has been working on
achieving sustainable growth and improvement of its medium- to long-term
corporate value in collaboration with its stakeholders. To that end, we continue
to strengthen our corporate governance by improving the soundness andtransparency of our management.

Priority Issues [Issues of Materiality]

Corporate Governance
Basic Views on Corporate Governance

Board of Directors / Board of Auditors

Based on our management philosophy, we believe that we should contribute to society by effectively utilizing the assets andresources we have borrowed from society, such as people, products, stores, money and information, and return profits to society.
To that end, we regard the enhancement of corporate governance as one of the highest priorities of our management. We havealso established a basic policy for the purpose of being a sound and highly transparent listed company that provides accurate
information to all stakeholders and of promoting profitable and effective management. We also endeavor to improve and further
develop our corporate governance by continuously examining the content of the basic policy.

Composition of the Board of Directors

Click the website below for the SUGI Pharmacy
Group Corporate Governance Basic Policy.
https://www.sugi-hd.co.jp/pdf/sustainability/data/cg_basic.pdf

Corporate Governance System*As of May 22, 2024

General Meeting of Shareholders
Report Appointment / dismissal

Nomination andRemuneration Committee

ReportCoordination

AdviseAudit Department
Direction

Sustainability Committee
Direction

Audit

ReportReportInformation Security
Risk
Committee
Committee
Safety and Health Disclosure
Committee
Committee

103

Coordination

Accounting
audit

ReportRepresentative Director
Consultation

Board of Auditors

Consultation

Board of Directors
Supervision

Appointment / dismissal

Participation /reportEach Department and Group Company[Internal control system]

Coordination

Accounting Auditor

Advise

Audit

Report7

Number of Directors who are External Directors

4

Number of External Directors designated as independent officers

4(As of May 22, 2024)

Composition of the Board of Auditors
The number of Auditors is as provided for in the Articles ofIncorporation, and a majority of Auditors shall be External
Auditors. Persons with the insight, high ethical standards,
objectivity and integrity required of Auditors will be appointed. In particular, at least one person with expertise in finance,accounting and legal matters will be selected.

Diagram of the Corporate Governance System

Appointment / dismissal

Number of Directors

Number of Auditors

4

Number of Auditors who are External Auditors

3

Number of External Auditors appointed as independent officers

3(As of May 22, 2024)

Roles of the Board of Directors
The Board of Directors aims to achieve the sustainable growthof corporate value by performing its supervisory function
through realizing highly effective corporate governance andby making the best decisions using objective judgment andappropriately exercising its authority.
(1) The Board of Directors makes important managerial
decisions in accordance with laws, ordinances, theArticles of Incorporation and internal rules, and it
supervises business execution.
(2) After precisely understanding the cost of capital of theCompany, the Board of Directors formulates management strategies and management plans, taking into
consideration the management philosophy andchanges in the external environment, and discloses
their outline. As for the formulated management
strategies and management plans, the Board of
Directors annually checks and analyzes the progressstatus, reviews the business portfolio, and revises, as
needed, the management resource distribution plans,
including new investments, the establishment of newstores, system investments, and investments in humanresource development.
(3) The Board of Directors is proactively involved in theformulation and operation of successor development
programs aimed at finding and developing capable
Directors and top management for the Group, including its operating subsidiaries. Furthermore, based on
the management philosophy and management strategies, the Board of Directors appropriately supervises
the content of the programs and subsequent development through post-program assignment and promotion of the participants in the programs.
(4) The Board of Directors delegates its decision-making
to the Representative Directors in terms of businessexecution of matters other than those matters thatshould be decided by the Board of Directors, in accordance with laws and regulations, the Articles ofIncorporation, and internal rules.
(5) As for the meetings of the Board of Directors, each
Director and Auditor shall secure an attendance rate ofat least 80%.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

The Company has chosen to adopt a corporate structure as a company with a Board of Auditors. In addition to the Board of
Directors, comprising seven Directors (including four External Directors),* and the Board of Auditors, we have also established a
Nomination and Remuneration Committee as an advisory organization to the Board of Directors concerning the nomination andremuneration of Directors and Auditors. We have also separated the functions of decision-making and supervision of managementfrom business execution, thus enhancing flexibility in our business execution by delegating authority to the management team
except in matters to be determined by the Board of Directors, in accordance with laws and regulations, the Articles of Incorporation, and internal rules.

The Board of Directors consists of diverse Directors in terms ofbackground, such as expertise, experience and gender. The
number of Directors is maintained at an appropriate level inaccordance with the provisions of the Articles of Incorporationin order to ensure that the Board of Directors functions mosteffectively and efficiently from the following viewpoints:(1) Sufficient diversity should be secured to conduct
decision-making and supervision of management.
(2) The Board of Directors Discussions should engage inactive discussion on relevant matters, including
concerns raised by the Independent External Directors.
In principle, at least one-third of the Directors are required to
be Independent External Directors in order to make use of
their abundant experience and expertise outside the Company for the management of the Company and, at the sametime, to strengthen the supervisory function of the Board of
Directors and improve the transparency of management.

Roles of the Board of Auditors
As an organization independent from the management
team, the Board of Auditors performs audits concerning the
Directors’ business execution, the internal control system,
accounting, and other matters.
(1) The Board of Auditors prepares a standard for appropriate evaluation of the Accounting Auditor. On anannual basis, the Board of Auditors evaluates theindependence and expertise of the Accounting
Auditor, based on the standard, and decides the detailsof the proposal for the General Meeting of Shareholders concerning the appointment or dismissal of the
Accounting Auditor.
(2) The Board of Auditors secures sufficient cooperationof External Directors so that they can smoothly collectinformation while maintaining their independence.
(3) The Board of Auditors collects necessary and sufficient
information to perform appropriate audits by securing
the cooperation of the Internal Audit Department, theFinance and Accounting Department, the Legal
Department, and other departments concerned.

104

Priority Issues [Issues of Materiality] ｜ Corporate Governance

Career Summary and Reasons for Appointment of Directors (As of May 30, 2024)

Eiichi Sakakibara
Representative
Director & Chairman
Date of birth: August 14,
1956
Years served as Director:
26 years
Attendance rate at board
meetings
100% (12/12 times)
Number of shares of theCompany held:
152,861 shares

Career Summary
September 1986: Joined the Company
September 2008: Managing Director, Sugi Pharmacy Co., Ltd.
March 2011: Representative Director & President, Sugi Pharmacy Co., Ltd.
March 2017: Representative Director & Chairman, Sugi Pharmacy Co., Ltd. (to date)
May 2017: Representative Director & President, SUGI Holdings Co., Ltd.
May 2021: Representative Director & Chairman, SUGI Holdings Co., Ltd. (to date)
Mr. Eiichi Sakakibara, as Representative Director of the Company and Sugi Pharmacy Co., Ltd.,
has led the Group and carried on its management philosophy, while fulfilling his responsibilities with his profound insights and extensive experience in the drugstore industry, by actively
working on, for example, the selection of items and the creation of stores that suit thechanging lifestyle of consumers and the improvement of customer services. Based on the
judgment that his management track record, broad business knowledge, and leadership forsustainable improvement of corporate value will significantly contribute to the further
development and expansion of the Group, we reappointed him as Director.

Shigeyuki Kamino
External Director
External

Independent

Date of birth: May 23,
1947
Years served as Director:
9 years
Attendance rate at board
meetings
100% (12/12 times)
Number of shares of theCompany held:- shares

Career Summary
April 1970: Joined Nagoya Railroad Co., Ltd.
May 2007: Representative Director, Mie Sangyo Co., Ltd. (to date)June 2008: Representative Director & Senior Vice President, Nagoya Railroad Co., Ltd.
April 2009: Representative Director & President, MEITETSU Department Store Co., Ltd.
May 2012: Chairperson, Chubu Department Store Association
May 2015: Director, SUGI Holdings Co., Ltd. (to date)
Mr. Shigeyuki Kamino has been involved in the management of other companies for many
years. Based on his abundant experience in and knowledge of management, he has actively
provided valuable insights and recommendations during deliberations of the Board of
Directors’ meetings, and he has also served as Chair of the Nomination and Remuneration
Committee. Based on the judgment that his appropriate supervision and advice from ahigh-level, independent standpoint supported by his profound insights and supervisory
capability in the areas of corporate management, business strategies, and organizational andhuman resource management will significantly contribute to the further development andexpansion of the Group, we reappointed him as External Director.

Career Summary

Shiro Uchida
External Director
External

Katsunori Sugiura
Representative
Director & President
Date of birth: October
14, 1978Years served as Director:
7 years
Attendance rate at board
meetings
100% (12/12 times)
Number of shares of theCompany held:
150,861 shares

March 2006: Joined the Company
March 2011: Managing Director, Sugi Pharmacy Co., Ltd.
March 2014: Representative Director & President, SUGI Smile Co., Ltd.
March 2017: Representative Director & President, Sugi Pharmacy Co., Ltd. (to date)
May 2018: Representative Director & Senior Vice President, SUGI Holdings Co., Ltd.
May 2021: Representative Director & President, SUGI Holdings Co., Ltd. (to date)
Mr. Katsunori Sugiura, as Representative Director of the Company and Sugi Pharmacy Co.,
Ltd., has been involved in management while fulfilling his responsibilities by actively working
on, for example, a business strategy for realizing the “Total Healthcare Strategy” designed toprovide comprehensive support to customers, from the maintenance of health andprevention of disease to nursing care and terminal care, a DX (digital transformation)
strategy, an overseas strategy, a capitalization strategy, and corporate value improvement
through the promotion of the SDGs. Based on the judgment that his business knowledge andleadership for sustainable improvement of corporate value will significantly contribute to thefurther development and expansion of the Group, we reappointed him as Director.

Date of Birth: April 2,
1955
May 2024 to date
Number of shares of theCompany held:- shares

Career Summary

Hideaki Takaishi
External Director
External

Independent

Date of Birth: October 7,
1958
May 2024 to date
Number of shares of theCompany held:- sharesShinya Sugiura
Director & SeniorVice President
Date of birth: November
30, 1979
Years served as Director:
7 years
Attendance rate at board
meetings
100% (12/12 times)
Number of shares of theCompany held:
150,574 shares

105

Career Summary
April 2004: Joined the Company
March 2010: Director, Sugi Pharmacy Co., Ltd.
March 2011: Director, SUGI Medical Co., Ltd.
March 2017: Managing Director, Sugi Pharmacy Co., Ltd.
May 2017: Director, SUGI Holdings Co., Ltd.
May 2021: Representative Director & President, SUGI Medical Co., Ltd. (to date)
December 2021: Representative Director & President, SUGI Nursing Care Co., Ltd.
March 2023: Director & Senior Vice President, Sugi Pharmacy Co., Ltd. (to date)
May 2023: Director & Senior Vice President, SUGI Holdings Co., Ltd. (to date)
Mr. Shinya Sugiura, as Director & Senior Vice President of the Company and Sugi Pharmacy
Co., Ltd., supervises its sales division, while fulfilling his responsibilities as Representative
Director of SUGI Medical Co., Ltd. with his experience in and knowledge of the healthcare
business by promoting the healthcare and nursing care businesses and leading M&A andbusiness alliances with major companies in the industry, thereby promoting the healthcare
and prescription strategies of the SUGI Pharmacy Group. Based on the judgment that his
knowledge and experience will significantly contribute to development of the core businessof the Group going forward, we reappointed him as Director.

Mr. Shiro Uchida has provided management guidance to major companies both in Japan andabroad and managed multiple companies by leveraging the extensive experience and greatknowledge he has cultivated while working as a certified public accountant in both Japanand the U.S. Based on the judgment that his appropriate supervision of and advice on theexecution of duties by the Directors from an expert perspective regarding digital transformation, corporate management, finance, M&A, etc., will significantly contribute to the further
development and expansion of the Group, we appointed him as External Director.

April 1983: Joined Mitsubishi Corporation
April 2011: Assumed position of Corporate Management Department General Manager of
Mitsubishi Corporation
April 2012: Representative Director, Vice President, and Chief Financial Officer of IT Frontier Corporation
July 2014: Vice President and Chief Administrative Officer of Tata Consultancy Services Japan, Ltd.
June 2016: Director and Audit and Supervisory Committee Member of Chiyoda Corporation
June 2018: Director and Executive Managing Officer of Mitsubishi Shoji Construction Materials Corporation
April 2021: External Director, Sanntsu Corporation (to date)June 2022: External Auditor of SystemEXE, Inc. (to date)August 2023: Full-time Auditor of Legaseed Inc. (to date)

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Chairman

Career Summary

Independent

October 1980: Joined Tokyo Office of Peat Marwick Mitchell Accounting Firm
January 1993: Partner in Charge of Japanese Companies in the U.S. at Chicago Branch,Price, Waterhouse & Co.
October 1999: Director of PricewaterhouseCoopers Consulting Co., Ltd.
October 2002: Director of IBM Business Consulting Services KK.
October 2005: Representative Director and President of BearingPoint Co., Ltd.
May 2009: Representative Director and President of PricewaterhouseCoopers
Consultants Co., Ltd.
July 2012: Representative Director and Chairman of PricewaterhouseCoopers Co., Ltd.
January 2015: Representative Director and Chairman of SAP Japan Co., Ltd.
April 2023: Representative Director and President of Community Mesh Co., Ltd. (to date)

Mr. Hideaki Takaishi has extensive experience and wide-ranging knowledge cultivated whileworking for many years on financial affairs and overseas business at a major general trading
company. He has also served as an external director and auditor for major Japanesecompanies. Based on the judgment that his appropriate supervision of and advice on theexecution of duties by the Directors from an expert perspective regarding overseas strategies,
capital policy, and various financial strategies will significantly contribute to the further
development and expansion of the Group, we appointed him as External Director.

Career Summary

Kaseri Oura
External Director
External

Independent

Date of Birth: October
27, 1975
May 2024 to date
Number of shares of theCompany held:- shares

September 1998: Joined Kyowa Hakko U.S.A.
June 2010: Joined Bristol-Myers Squibb U.S.A.
October 2012: Executive Managing Officer responsible for Research and Development
Division of Bristol-Myers Squibb K.K.
June 2016: People & Business Resource Group General Manager of Bristol-Myers Squibb U.S.A.
October 2017: Executive Managing Officer responsible for Commercial Division ofBristol-Myers Squibb K.K.
September 2019: CEO and Executive Director of Global Health Innovative Technology Fund
November 2019: Director of Tokyo American Club
September 2021: President and CEO of Labcorp Development Japan Co., Ltd. (currently
Labcorp Laboratories Japan, LLC) (to date)
May 2022: Regular Member of Board of Overseers at Temple University Japan Campus (to date)November 2023: Governor of American Chamber of Commerce in Japan (to date)
Ms. Kaseri Oura has worked for major pharmaceutical manufacturers both in Japan andabroad and has extensive experience and deep knowledge cultivated through her longglobal career in the pharmaceutical industry. Based on the judgment that her appropriate
supervision of and advice on the execution of duties by the Directors from an expert perspective regarding the formulation of healthcare strategies in collaboration with large pharmaceutical manufacturers, among other things, will significantly contribute to the further
development and expansion of the Group, we appointed her as External Director.

106

Priority Issues [Issues of Materiality] ｜ Corporate Governance

Career Summary and Reasons for Appointment of Auditors (As of May 22, 2024)

Skills Matrix

Toshihiko Sakamoto Career Summary
External Full-time Auditor
External

Independent

Career Summary

Toshiaki Shimura
External Full-time Auditor
External

Independent

Corporate
management

Businessstrategies

Human
resources

Legal affairs andrisk management
●

●

●

●

●

●

●

●

Shinya Sugiura

●

●

●

●

Shigeyuki Kamino

●

●

●

Shiro Uchida

●

●

●

Hideaki Takaishi●●

Kaseri Oura●●

External

Independent

Date of birth: April 10,
1969
Years served
14 years
Number of shares of theCompany held:- shares
Attendance rate at Audit& Supervisory Committee
meetings
100% (13/13 times)

Ms. Kana Yasuda has engaged in a wide range of business fields, including accounting audits
for business corporations, as a certified public accountant and a certified public tax accountant,also serving as an external auditor and an external director for listed companies. We haveappointed Ms. Yasuda as External Auditor, expecting her to conduct strict audits from an
independent standpoint, supported by her strong expertise in the areas of accounting and tax
and abundant experience in the areas of legal affairs, compliance, and risk management.

Career Summary

Yoshiko Hayama
AuditorDate of birth: October 7,
1959
May 2024 to date
Number of shares of theCompany held:- shares107

April 1983: Joined The Fuji Bank, Limited (currently, Mizuho Bank, Ltd.)
October 1990: Joined Tohmatsu & Co. (currently, Deloitte Touche Tohmatsu LLC)
March 1994: Registered as a Certified Public Accountant
January 2007: Joined KPMG Century Audit Corporation (currently, Ernst & Young ShinNihon LLC)
January 2015: Representative, Yoshiko Hayama Certified Public Accountant Office (to date)
May 2016: Director, SUGI Holdings Co., Ltd. (to date)August 2016: Fellow Member, The Japanese Institute of Certified Public Accountants (to date)
May 2018: External Auditor, Adastria Co., Ltd. (to date)June 2020: External Director, Zensho Holdings Co., Ltd.
May 2023: External Auditor, BELLSYSTEM24 Holdings, Inc. (to date)Ms. Yoshiko Hayama has a high level of expertise in finance and accounting as a certified public
accountant and an external director and auditor of listed companies, as well as extensive
experience in and wide-ranging knowledge of legal affairs, compliance, and risk management.
Furthermore, she has served as a Director of the Company since May 2016 and is familiar withthe business of the Company. Based on our judgment that she is capable of appropriately
auditing the Company’s business by applying her knowledge of the overall management of theCompany and her great expertise in accounting, we elected her as Auditor.

●●

Overseas
operations

●

●

●

●

●

●
●

●
●

●

Toshiaki Shimura●●

Kana Yasuda●●

Yoshiko Hayama●●

Training programs (past results)

and External Auditors to share our management philosophy,

Domestic and overseas
economic status

Marketingmanagement plan, business overview, finance, organization,

Trend of capital markets

Legal affairs and corporate governanceetc. We offer training programs for Directors, Auditors andTrend of medical systems

Corporate Governance CodeDirectors of the major subsidiaries concerning relevant laws,

Sustainability management

Compliance training

ESG

Risk management

Management strategy

Organization and HR management andleadershipManagement and financeDigital transformation

finances, corporate governance, risk management, etc. when
they newly take office. After they take office, we continuously
provide or mediate training opportunities according to theirduty, capability and experience, and we offer them financial
support for the cost.

October 1993: Joined KPMG Century Audit Corporation (currently, Ernst & Young ShinNihon LLC)
April 1997: Registered as a Certified Public Accountant
March 2000: Established Yasuda Tax & Accountant Office, Director (to date)
March 2004: Registered as a Certified Public Tax Accountant
September 2009: External Auditor, Shinpo Co., Ltd.
May 2010: Auditor, SUGI Holdings Co., Ltd. (to date)June 2016: External Director, GEO HOLDINGS CORPORATION (to date)June 2019: External Director, Chuo Spring Co., Ltd. (to date)June 2020: External Director (Member of Audit and Supervisory Committee), KONDOTEC INC. (to date)
September 2021: External Director, Monogatari Corporation (to date)●Toshihiko Sakamoto

Mr. Toshiaki Shimura has held key positions at listed Japanese companies and has extensive
experience and deep knowledge cultivated from being involved in audits at Japanese andoverseas companies. Based on our judgment that he is capable of appropriately auditing theCompany’s business, including its expanded businesses such as DX and overseas businesses,
from an objective viewpoint, we elected him as External Auditor. Although he has not been
involved in corporate management except for serving as an external director or corporate
auditor, we have judged that he is capable of appropriately fulfilling his responsibilities as
External Auditor for the abovementioned reasons.

External Auditor●●

Training program (for officers, including those ofmajor subsidiaries)

Digitaltransformation●

Eiichi Sakakibara

We continuously provide opportunities for External Directors

Career Summary

Healthcare

Katsunori Sugiura

April 1987: Joined Fuji Bank, Ltd.
January 2006: Assumed position of IT and Systems Management Department Deputy General
Manager of Mizuho Corporate Bank, Ltd.
October 2014: Deputy General Manager, Operational Auditing Department, Mizuho Bank Ltd.
April 2022: Manager, Internal Audit Office, Foster Electric Company, Ltd.

Kana Yasuda

Finance andaccounting

Notice regarding introduction of executive managing officer system
SUGI Holdings Co., Ltd. is pleased to announce that, at the meeting of the Board of Directors held on January 22, 2024, it decided
to introduce an executive managing officer system and appoint executive managing officers.

1. Purpose of introducing an executive managing officer system
We have introduced an executive managing officer system in order to respond promptly and flexibly to changes in the environment
surrounding the Group and its management issues and to promote digital transformation and overseas business, which are theConsolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

Date of birth: September
28, 1963
May 2024 to date
Number of shares of theCompany held:- shares

AuditorMr. Toshihiko Sakamoto has been involved in business management at Japanese companies
and has abundant experience in and knowledge of management. Furthermore, he took
office as an Auditor of the Company in May 2012 and is familiar with its business. We havejudged that he is capable of conducting proper audits of the Company’s business from an
objective viewpoint by applying his profound insights concerning corporate management
and knowledge of the overall management of the Company, and thus we continued toappoint him as External Auditor.

Director

Date of birth: October 25, 1946
Years served as External Auditor:
12 years
Attendance rate at board
meetings
100% (12/12 times)
Attendance rate at Audit &Supervisory Committee meetings
100% (13/13 times)
Number of shares of theCompany held:
300 shares

October 2001: General Manager, Finance and General Affairs Division, Nagoya
Branch, ITOCHU Corporation
June 2006: Representative Director & President, C&S Co., Ltd.
June 2009: Senior Managing Director in charge of human resources, finance andaccounting and information systems, ITOCHU Sugar Co., Ltd.
May 2012: Auditor, SUGI Holdings Co., Ltd.
March 2017: Auditor, Sugi Pharmacy Co., Ltd. (to date)
Auditor, SUGI Medical Co., Ltd. (to date)
May 2017: Full-time Auditor, SUGI Holdings Co., Ltd. (to date)Name

Company’s growth strategies, while strengthening corporate governance.

2. Overview of the executive managing officer system① Executive Managing Officers are delegated the authority to execute business operations based on business policies decided
by the Board of Directors and are responsible for business execution under the supervision of the Board of Directors.
② Executive Managing Officers are appointed or dismissed by resolution of the Board of Directors.
③ The term of office of Executive Managing Officers shall be one year, and reappointment shall not be precluded.

3. Date of introduction of the executive managing officer system: March 1, 2024
4. Executive managing officer system
New position

Name

Current position

Executive Managing Officer in Charge of Corporate Planningand Finance

Makoto Kasai

Newly appointed

Executive Managing Officer in Charge of Human Resource
Management, Administration, and Risk Management

Shigeki Mori

Newly appointed

Executive Managing Officer in Charge of Digital
Transformation and Corporate Branding

Kazuya Morinaga

Newly appointed

Executive Managing Officer in Charge of Overseas Business

Takeshi Yamamoto

Newly appointed

Executive Managing Officer in Charge of Healthcare andPrescription Dispensing

Satoshi Kubo

Newly appointed

108

Priority Issues [Issues of Materiality] ｜ Corporate GovernanceMatters concerning independent officers
In order to ensure the objectivity and transparency that are necessary for the appropriate governance of the Company, the Company has established independence criteria for external officers of the Company (meaning External Directors and External Auditors,
including their candidates) shown below. If an external officer satisfies all of the following items, he or she is deemed to be
sufficiently independent from the Company:

Notes:
1. An “executive” means an executive director, executive officer, executive managing officer, or executive employee of a stock company, a
director of a juridical person or other group other than a company, and a person holding a similar position and a similar employee of ajuridical person or other group including a company.
2. A “person whose major business partners include the Group” is a person who falls under any of the persons listed below:
・A business partner group (meaning a person who belongs to a consolidated group to which a direct business partner belongs; hereinafter the same shall apply) that is providing products or services to the Group and whose amount of transactions with the Company forthe latest fiscal year was 10 million yen or more and exceeded 2% of its consolidated net sales or total revenue.
・ A business partner group to which the Group owes a total liability of 10 million yen or more at the end of the latest fiscal year andexceeding 2% of consolidated total assets of the business partner group at the end of the same fiscal year.
3. A “major business partner of the Group” is a person who falls under any of the persons listed below:
・A business partner group to which the Group is providing products or services and whose amount of transactions with the Company
for the latest fiscal year was 10 million yen or more and exceeded 2% of the Company’s consolidated net sales.
・A business partner group that owes to the Group a total liability of 10 million yen or more at the end of the latest fiscal year and exceeding 2% of consolidated total assets of the Company at the end of the same fiscal year.
・A financial institution group (meaning a person who belongs to a consolidated group to which a direct lender belongs) from which, atthe end of the latest fiscal year, the Group has a total borrowing exceeding 2% of consolidated total assets of the Company at the endof the same fiscal year.
4. A “large amount of money or other property” means 10 million yen or more in total for the latest fiscal year if it refers to an individual. If
it refers to a juridical person, partnership, or other group, it means an amount equivalent in total to more than 2% of consolidated total
assets of the juridical person, partnership, or other group at the end of the latest fiscal year.
5. A “close relative” means a spouse or a relative within the second degree of kinship.
6. An “important executive” means an executive who holds a position that is equivalent to or above the position of director, executive
officer, executive managing officer, or general manager of a division/department or an executive who has equivalent power.
7. “Mutually appointed” means a relationship in which an executive of the Company serves as an external officer of the other company
while an executive of the other company serves as an external officer of the Company.

109

Effectiveness evaluation of the Board of Directors
For the purpose of securing further effectiveness and improving the functions of the Board of Directors, we implement an effectiveness evaluation of the Board of Directors. We conduct a written questionnaire survey and hold interviews on the self-evaluation
with all the Directors and Auditors concerning the effectiveness of the Board of Directors in terms of its structure, operation andagenda, as well as the systems to support the Board of Directors, management strategy, and challenges.
Based on the results of the questionnaire survey, we implement constructive discussions for future initiatives by sharing theevaluation results of the current status and challenges within the Board of Directors.

Outline of evaluation results (for the fiscal year ended February 2024) and future initiatives
The Board of Directors is functioning highly effectively as a result of its improved composition, operation, agenda, and support
system. The Board is also having sufficient discussions on important agenda, such as M&A and alliances, as annual policies on
healthcare, digital transformation, overseas business, ESG, etc., and the medium-term management plan are properly shared.
In the future, we will work to increase the effectiveness of the Board of Directors further by increasing the number of External
Directors and Auditors to increase diversity, holding board meetings more effectively and efficiently, and enhancing discussions on
management strategies and issues with awareness of the cost of capital and share price.
1. Regarding the composition of the Board of Directors
The diversity of Directors and Auditors in terms of the knowl-

4. Regarding the support system for the Board of
Directorsedge, experience, skills, etc., has been secured appropriately,

Directors and Auditors are provided with appropriate oppor-

and they are individuals who can contribute to frank, active,

tunities to obtain necessary information and to request theand constructive discussions.

provision of additional information. The support of theWe can expect increased diversity and more constructive

Internal Audit Department is also ensured.

and fruitful discussions going forward as the numbers of bothIn the future, we will consider introducing regular meetings

External Directors and Auditors have increased since May

only among external officers and interviews between external2024.

officers and Directors/Executive Managing Officers in order tofurther boost the ability of the Board of Directors to get things

2. Regarding the operation of the Board of Directors

done.

Board meetings are properly operated as they are operated
systematically in accordance with an annual schedule, andany materials to be submitted to the Board of Directors are

5. Regarding the self-evaluation by Directors andAuditors

sent in advance and important matters are explained before-

The results of self-evaluation by Directors and Auditors

hand to board members.

indicate that each of them has been able to update informa-

We will continue to ensure that materials are sent properlytion through on-site visits and exchange meetings with otherin advance and important matters are explained properly

external officers and to express their opinions from diverse

beforehand. We will also work to operate board meetings

perspectives based on their own knowledge.

more effectively and efficiently through more appropriate

We will continue to provide support to the self-improve-

meeting scheduling and time allocation over agenda items.

ment efforts of Directors and Auditors in order to ensure that

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality

1. The officer in question is not currently an executive (Note 1) and have never been an executive of the Company or any of its
subsidiaries and associates (hereinafter collectively referred to as the “Group”) during the period of 10 years immediately
before assuming office.
2. The officer in question is not a person whose major business partners include the Group (Note 2) or an executive of such person.
3. The officer in question is not a major business partner of the Group (Note 3) or an executive of such business partner.
4. The officer in question is not a major shareholder of the Company who directly or indirectly holds 10% or more of the total
voting rights of the Company or an executive of such shareholder.
5. The officer in question is not an executive of a person 10% or more of whose total voting rights are directly or indirectly held by
the Group.
6. The officer in question is not a consultant, accounting expert (such as a certified public accountant), or legal expert (such as alawyer) who receives a large amount of money or other property (Note 4) from the Group in addition to the remuneration as
an officer of the Company. If such a person is a juridical person, partnership, or other group, any persons belonging to the groupare included.
7. The officer in question is not a person who receives a large amount of money or other properties (Note 4) from the Group in theform of donation.
If such a person is a juridical person, partnership, or other group, any persons belonging to the group are included.
8. The officer in question is not an accounting auditor of the Company. If such an accounting auditor is a juridical person, partnership, or other group, any persons belonging to the group are included.
9. The officer in questions is not a person who has fallen under any of 2. through 8. above anytime during the last five years.
10. No close relative (Note 5) of the officer in question falls under any of 2. through 8. above (except for 6. and 8., limited to an
important executive (Note 6)).
11. The officer in question is not an executive of another company with which the Company has a relationship in which external
officers are mutually appointed (Note 7).

Effectiveness Evaluation of the Board of Directors

each of them will be able to fulfill their roles and responsibili3. Regarding the meeting agenda of the Board ofties at board meetings.

Directors
Agenda items for board meetings have been selected appro-

6. Regarding management strategies and issues

priately as the direction of corporate strategies and the

As annual policies on healthcare, digital transformation,

medium-term management plan have been shared with theoverseas business, ESG, etc., and the medium-term manage-

Board of Directors, and the scope of delegation to thement plan are properly shared every year, the Board ofmanagement side has been clearly defined.

Directors can discuss important matters, such as M&A andIn the future, we will also consider introducing discussions

alliances, sufficiently.

at board meetings on remuneration and appointment ofIn the future, we will further enhance discussions on

Directors in coordination with the Nomination and Remuner-business portfolio rebalancing, management resources alloca-

ation Committee in order to ensure more appropriatetion, etc., through the monitoring of management strategies

remuneration and appointment of Directors.

and issues with awareness of the cost of capital and shareprice.

110

Priority Issues [Issues of Materiality] ｜ Corporate Governance

Remuneration of Directors and Auditors
Policy for determining the contents of remunerations of individual Directors
After a draft proposal was deliberated by the Nomination and Remuneration Committee, the majority of which are independent
External Directors and Auditors, a policy for determining the details of remuneration of individual Directors was approved by the
Board of Directors. The Board of Directors has also determined that the remuneration of individual Directors for FY 2023 was in linewith the determination policy mentioned above because the policy for determining the details of remuneration and the details of■ Policy for determining the percentages of the amounts of monetary remuneration,
performance-based remuneration, and non-monetary remuneration to the amount of remunerationof individual Directors
The Company has voluntarily established the Nomination and Remuneration Committee as an advisory body to ensure objectivity
and transparency for the remuneration of Directors. The percentage of each component of the remuneration of Directors is determined by the Nomination and Remuneration Committee after examining the remuneration of companies of a similar scale in thesame industry and considering the Company’s financial results each time such remuneration is paid.

remuneration determined were based on the determination policy approved by the Board of Directors and were determined after
they were deliberated by the Nomination and Remuneration Committee.

■ Matters concerning the delegation of determination of the remuneration of individual Directors■ Basic policy

The determination of the specific amount of remuneration of each Director shall be left to the discretion of Representative Director &In order to determine the remuneration of Directors, the Company has established basic amounts for each position, based on adesign that has been developed by using data provided by specialized external organizations as well as publicly available data andtaking into consideration the remuneration levels of industry peers and companies in other industries. More specifically, our basic
policy is to ensure that the remuneration of Directors other than External Directors functions as an incentive for them to pursue
sustainable improvement of the Company’s corporate value by adopting a remuneration package that includes performance-based remuneration based on the financial results of the Company for each fiscal year and non-monetary remuneration(restricted stock), as well as fixed remuneration. On the other hand, the remuneration of External Directors consists only of fixed
remuneration in view of their roles and independence.
The remuneration of Auditors consists only of fixed remuneration (monthly fixed remuneration), which is deliberated by the
Nomination and Remuneration Committee and determined through consultation within the Board of Auditors within the limit on
their remuneration approved by the General Meeting of Shareholders.

The fixed remuneration of the Directors of the Company shall be fixed monthly remuneration and shall be determined in accor-

shall determine the amounts of fixed remuneration and performance-based remuneration within the limit on such remuneration
approved by the General Meeting of Shareholders.
In order to ensure that the authority delegated as described above is exercised properly, the Company requires the Representative
Director & President to respect the deliberation results of the Nomination and Remuneration Committee, the majority of which
consists of independent External Directors and Auditors, in determining the specific amount of remuneration of each Director.
The authority mentioned above is delegated to the Representative Director & President because the Company has determined that
he is able to determine the specific amount of remuneration of each Director in a comprehensive manner as he is more familiar withthe management conditions of the Company than anybody else and is the most suitable person to evaluate the areas of responsibility
and job responsibilities of each Director, while examining the environment surrounding the Company and the overall financial resultsof the Company from a high-level viewpoint.
Regarding restricted stock as non-monetary remuneration, the specific number of shares allotted to each Director and other necessary matters are determined by the Board of Directors based on the deliberation results of the Nomination and Remuneration
Committee.

Total amount of remuneration for the current fiscal year

dance with each individual’s position, contribution, etc., and in comprehensive consideration of the levels of salaries and other
remuneration of the employees of the Company as well as public standards.

■ Policy for determining the details and the calculation method of the amount or the quantity of
performance-based remuneration
Performance-based remuneration shall be paid in cash. Its amount shall be determined in accordance with the degree of achievement of the consolidated operating income budget for each fiscal year and based on the basic amount established for eachposition after adjusting the amount for each Director’s contribution in the fiscal year. Any performance-based remuneration shallbe paid at the same time each year. We have chosen consolidated operating income as the indicator for performance-based
remuneration because we recognize the importance of improving motivation to pursue profit in our core business.

■ Policy for determining the details and the amount or quantity or the calculation method thereof of
non-monetary remuneration
Non-monetary remuneration shall be provided in the form of restricted stock to the Directors of the Company other than External
Directors for the purpose of providing them with an incentive to achieve the sustainable growth of the Company’s corporate value
and to promote further value sharing with shareholders. Restricted stock shall be granted in exchange for contribution in kind ofmonetary remuneration claims determined based on the basic amount established for each position within the upper limit on such
remuneration approved by the General Meeting of Shareholders. The timing of the grant shall be determined as necessary by the
Board of Directors in comprehensive consideration of the composition of the Board of Directors, the purpose as an incentive, themanagement conditions of the Company, and any other relevant matters.
In principle, the restricted period of the restricted stock shall be the period until such Directors resign or retire from all of theirpositions as an officer or employee of the Company or its subsidiary that are specified in advance by the Board of Directors of theCompany.

111

Category
Directors(of which, External
Directors)
Auditor(of which, External
Auditors)
Total(of which, External
Directors andExternal Auditors)

Total amount(million yen)

Total amount by type (million yen)Fixed
remuneration

Performance-based
remuneration

Non-monetary
remuneration

Number of
persons

177

118

52

7

5

（13）

（13）

（−）

（−）

（2）

17

17

−

−

3

（17）

（17）

（−）

（−）

（3）

194

135

52

7

8

（31）

（31）

（−）

（−）

（5）

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality■ Policy for determining the amount of fixed remuneration (monetary remuneration) of individual
Directors

President Katsunori Sugiura by resolution of the Board of Directors. Under the delegation, the Representative Director & President

Notes: 1. The total amount of remuneration paid to Directors excludes the portion of employee salary of Directors who concurrently serve as employees.
2. The upper limit on remuneration of Directors was resolved at 400 million yen per year (not including salaries received as
employees) at the 25th Ordinary General Meeting of Shareholders held on May 24, 2007. At the time of the resolution,
the number of Directors was 12.
In addition to the aforementioned amount of remuneration, the total amount of monetary remuneration claims
provided as restricted stock remuneration to Directors (excluding External Directors) was resolved to be within 80 million
yen per year (not including salaries received as employees) and the total number of shares of common stock to be issued
or disposed of was resolved to be within 10,000 per year at the 40th Ordinary General Meeting of Shareholders held on
May 20, 2022. At the time of the resolution, the number of Directors was 3 (excluding External Directors).
3. The upper limit on remuneration of Auditors was resolved at 30 million yen per year at the 25th Ordinary General
Meeting of Shareholders held on May 24, 2007. At the time of the resolution, the number of Auditors was 3.
4. The non-monetary remuneration consists of the shares of the Company, and the terms and conditions of allotment are asstated in “Policy for determining the contents of remuneration of individual Directors” above.

112

Priority Issues [Issues of Materiality] ｜ Corporate Governance

Disclosure

Relationships with Shareholders

We appropriately disclose information on a timely basis in compliance with laws, regulations and related rules toward the realization of fair and highly transparent management.

Securing shareholders’ rights
We are determined to act appropriately and treat all shareholders, including minority shareholders and foreign shareholders,
substantially equally according to the number of shares they hold and secure shareholders’ rights as represented by the exercise of
voting rights at the General Meeting of Shareholders.
In the case where we are to implement a capital policy that may result in a change of control or a large-scale dilution, we will
resolve the matter by fully discussing the necessity and rationality at the Board of Directors before providing sufficient explanation
to shareholders from the perspectives of fulfilling fiduciary duties for shareholders.

(1) We will proactively disclose both financial and non-financial information if such information is considered usefulfor shareholders and other stakeholders to deepen theirunderstanding of the Company.
(2) Disclosure will be made in such a manner that our shareholders and other stakeholders can easily access it.
(3) From the viewpoint of information disclosure particularly

Constructive dialogues with shareholders and investors

Stock split

We endeavor to improve medium- to long-term corporate value through constructive dialogues with shareholders and investors.

We have carried out a stock split for the purpose of lowering
the share price per investment unit, thereby making it easierfor investors to invest and expanding the investor base.

related departments will periodically exchange opinions
and share information based on their professional
viewpoints and respond to matters in cooperation witheach other.
(5) Useful opinions and requests expressed in dialogues withshareholders and investors will be provided to the Boardof Directors, etc. as necessary.
(6) The composition of shareholders will be checked periodically, based on which communication will be improved in
an appropriate manner suited to the shareholders andinvestors.
(7) In carrying out dialogues with shareholders and investors,
we will comply with laws and regulations and otherrelated rules and manage insider information properly.

On March 1, 2024, each share of common stock was split into three shares.

Stock split
ratio

１：３

Record date of stock split:
February 29, 2024

Beforethe split

For example,
If share price is
6,000 yen,

Effective date: March 1, 2024

100 shares

100 shares Afterthe split
100 shares
100 shares

60 yen per share

20 yen per shareunit (100 shares)

unit (100 shares)

With the aim of promoting sustainability management, we have established the Sustainability Committee as an advisory body to
the Representative Director & President.

■ Policy on acquisition and shareholding(3) As for the exercise of voting rights of the shares held, we
make a comprehensive judgment by confirming whether
each agendum will contribute to the enhancement ofcorporate value of the Company from medium- tolong-term perspectives while respecting the management
policy of the relevant issuer.
(4) We will not carry out any transaction with a company that
holds the Company’s shares if the transaction is not
economically rational. When such a company expresses
the intention to sell the Company’s shares, we will not try
to prevent it from doing so.

❶ The Sustainability Committee discusses the sustainability strategy and initiatives for the entire Group andreports and makes recommendations to the Representative Director & President.
❷ The Risk Committee and the Information Security Committee have been established inside the Sustainability
Committee as the bodies that manage relevant risks and perform tasks assigned by the Sustainability Committee.

Functions of Each Committee
Committee

Sustainability Committee

Risk Committee

The Committee deliberates on matters concerning various risks to the operation of the entire SUGI Pharmacy
Group (changes in business environment, compliance, information management, etc.) while raising awareness and providing education about risk management.

Information Security
Committee

The Committee deliberates on matters concerning continuous enhancement and improvement of information security measures for the entire SUGI Pharmacy Group while raising awareness and providing education
about information security.

Safety and HealthCommittee

The Committee deliberates on matters concerning the prevention of occupational injury, securing employee
safety and health, and the formation of a comfortable work environment for the entire SUGI Pharmacy
Group while raising awareness and providing education about safety and health.

Disclosure Committee

The Committee deliberates on the information transparency, timeliness, fairness, continuity, and consistency
between disclosure items in disclosure required by the Financial Instruments and Exchange Act and theCompanies Act, timely disclosure required by the rules of relevant financial instruments exchanges, important voluntary disclosure, and other reports containing non-financial information, such as ESG information.

As for the cross-shareholdings of the Company, the Board of Directors has examined each stock to confirm the significance of its
holding purpose.

Status of dialogues with investors

FY 2021

FY 2022

FY 2023

Financial briefings for institutional investors and analysts (1H and full-year)

2

2

2

Financial briefing small meetings for institutional investors and analysts

34

27

31

Conference hosted by securities companies

8

5

5

168

166

180

Individual meetings for institutional investors (face-to-face meetings and interviews by phone)

Functions
The Committee deliberates on matters concerning the contribution of the SUGI Pharmacy Group to thesustainable development of society and the economy through its business activities and the creation ofcommon value with society and while working to ensure that the SUGI Pharmacy Group will achieve sustainable growth by supervising risk management, information security, employee safety and health, information
disclosure, etc.

■ Verification results by the Board of Directors

113

Each share of common stock owned by shareholders listed orrecorded in the closing register of shareholders on the record
date of Thursday, February 29, 2024 is to be split into threeshares.

Establishment of the Sustainability Committee

Cross-shareholdings(1) In principle, we will not hold shares under a cross-shareholding policy toward the improvement of corporate
value except in the case of strategically important collaboration and the case where the maintenance and development of trading relationships are required.
(2) As for shares held, we will periodically verify the rationality of holding the shares, and the Board of Directors will
check this on an annual basis, the details of which will be
disclosed. We will gradually sell any shares whose holding
purpose is no longer significant, in a manner taking into
consideration the status of the relevant issuer.

Method of the stock split

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality(1) We will focus on the improvement of IR activities to gain
understanding of our management philosophy, management strategy, financial strategy, management plan,business results, and concept of sustainability.
(2) The Representative Director & President will supervise all
aspects of dialogue, and consultation will be provided by
the relevant departments, if necessary.
(3) As for individual face-to-face meetings with shareholders
and investors, the IR department will serve as the contact
point, and the matter will be appropriately handled withina reasonable scope based on the requests of and the
purpose of the meeting with the shareholders andinvestors.
(4) In order to promote constructive dialogues with shareholders and investors, the IR department and otherto overseas investors, we will prepare materials in English
concerning the Company profile, management strategy,
medium-term management plan, budget, trend of
business results, notice of convocation of the General
Meeting of Shareholders, corporate governance basic
policy, and ESG. These materials will be posted on thewebsite of SUGI Holdings Co., Ltd.

114

Priority Issues [Issues of Materiality] ｜ Corporate GovernanceRisk Management

Reinforcement of information security systems and education

For the purpose of promoting sound, highly transparent and efficient management, the Board of Directors will improve the systems
concerning compliance, appropriateness of financial reporting, risk management and other matters, seeking more effectivefunctions in the internal control system from the perspectives of group management, and supervise their operation status by
utilizing the Internal Audit Department. In order to enhance the accuracy of internal control, we endeavor to minimize managerial
risks by documenting and monitoring the details of the business operations of each group company, the assumed risks, and thecountermeasures to them. The Representative Director & President has established the Risk Committee and the Information Security Committee inside the Sustainability Committee to control high-risk fields in management, thus improving the relevant business
operations and preventing accidents at an early stage.
The Risk Committee prevents risks from occurring by evaluating and identifying serious risks concerning corporate management,such as business strategy, natural disasters, and infectious diseases, and by taking actions in advance. In the event of a crisis, we areprepared to immediately establish a separate “emergency task force” to act quickly and appropriately.

Prevention of unauthorized access from outside● Establish the Information Security Basic Policy● Inform employees of the Information Security● Install firewalls● Implement defense against unauthorized

Basic Policy and provide relevant education● Obtain certification from an external organization(ISMS)

Prevention of virus infection

intrusion from websites● Prevent the receipt of virus-infected emails

Prevention of data leakage● Introduce anti-virus software● Apply security patches● Restrict communications with and browsing of● Prohibit the connection of PCs with external devices● Restrict access to customer information● Install security rooms and security cameras● Preserve logs of PC operations and email sending

websites

to strengthen the ability to investigate in the caseof leakage and secure tracking trails

Examples of the major risks to be managed
Risks
1.
Risks
concerningbusinessstrategy

1-1 Business environment

Examples of the major risks● Intensified competition with industry peers and different industries

Information Security Basic Policy

1-2 Applicable laws, regulations,etc.

● Drastic reductions of drug prices and dispensing fees

The SUGI Pharmacy Group has been engaging in manage-

Going forward, we will endeavor to maintain and

1-3 Investments● Failure of investments in new stores

ment to contribute to society by effectively utilizing assets

improve information security through compliance withand resources borrowed from society (people, things,

and proper handling of the aforementioned policy andmoney, information, etc.) and continuing to provide

the “Handling of Personal Information (Privacy Policy)” by● Damage to properties held and repair costs arising therefrom

profits to society. To realize this, we understand that it isour officers and employees.

● Damage to stores and facilities due to typhoons, heavy rains, etc.

our top priority management issue to strengthen the● Introduction of a carbon tax, etc. due to the tightening of regulations

information security of the entire Group by protecting our● Stagnation of economic activities

customers’ personal information and other information● Revisions of applicable tax rules and accounting standards● Failure of M&A investments● Stagnation of economic activities

2-1 Large-scale disasters
2.
Risks relating
to natural
disasters,
2-2 Climate change
infectious
diseases, etc.
2-3 Infectious diseases● Suspension of business activities due to damage to stores, offices, systems and employees● Self-restraint and suspension of business activities at stores● Suspension of business activities due to infection of employees● Occurrence of serious mistakes in prescription dispensing

3-1 Wrongdoing and accidents● Fraudulent activities by officers or employees● Defective products, foreign substance mixing, and inappropriate labeling● System failures caused by accidents, defects, etc.

3-2 Information security
3.
Risks relating
to corporate
management 3-3 Human rights
3-4 Human assets
3-5 Supply chain

unauthorized access and cyberattacks. Based on thisconcept, the Group established the “Information Security
Basic Policy.”

https://www.sugi-hd.co.jp/privacypolicy/#security● Unauthorized invasion and/or access and virus infection from external networks● Leakage of customer information● Worsening of work environments and safety and health● Acts of human rights violation (harassment and discriminatory practices, etc.)● Shortage of managerial human resources● Intensified competition for hiring capable human resources● Human rights and environmental issues concerning the supply chain● Changes in purchase prices

Internal reporting system
For the purpose of preventing and correcting violation oflaws and regulations or misconduct by organizations or
individuals, SUGI Pharmacy Group has established a compliance consultation channel, enabling employees to seek
consultation anonymously. The internal reporting system isoperated in accordance with the internal rules, and reporting
channels are established within the Group and in external law
offices. In order to prohibit disadvantageous treatment of
informants and increase the recognition and understandingof the abovementioned system, we have ensured that
contact information for the system is displayed at our storesand offices and have also distributed the Compliance andDisaster Countermeasure Pocket Book. By such promotional
activities, we endeavor to establish a sound reporting system.
The Internal Reporting System was renamed “Anything115

assets owned by us from various threats, including

Click the website below for the
Information Security Basic Policy

Conformance of information security management systems to standard requirements
Certain operations at the SUGI Pharmacy Group, including registration of information of point card members, maintenance ofincoming call records, provision of specified health guidance, customer information analysis, and sales promotion and advertising,conform to the standard requirements of ISO27001.
The Group will endeavor to strengthen and upgrade its responses in the areas of personal information protection and information security by receiving examinations by external organizations appropriately.

Consultation Call Service for All Workplace Concerns” in FY
2021 to create an environment where employees feel able touse it more freely.

Certification registration number: JQA-IM1736
Scope of registered activities: Development and provision of health guidance service,information offering service, etc., based on healthcare data

Personal information protection and enhanced
information security
The SUGI Pharmacy Group works to strengthen the protection of personal information and information security in orderto protect and prevent the leakage of personal information,customer information, and confidential information. By
establishing the Information Security Basic Policy, the Groupis taking various measures to prevent any unauthorizedaccess from outside, virus infection, or data leakage. At thesame time, we work to strengthen information security
systems and educate employees appropriately.

Consolidation of the Value Creation Foundation/
Commitment to Issues of Materiality● Industrial reorganization and oligopoly through large-scale M&A

Certification registration number: JQA-IM1863
Scope of registered activities: Incoming call handling and record preparation services
Managing the registration of and changes in point card members
Certification registration number: JQA-IM1978

JQA-IM1736

Scope of registered activities: The following operations at the product management

JQA-IM1863

department and the digital marketing department

JQA-IM1978① Operations concerning CRM strategies and analysis using the Company’s own media;
and② Operations concerning sales promotion, advertising, and planning and implementation management of various measures and campaigns in the digital domain.

116

119

Financial Indices120

Non-financial Indices124

Consolidated Balance Sheet

125

Consolidated Statement of Income and Consolidated Statement ofComprehensive Income

126

Consolidated Statement of Cash Flows127

Stock Information

128

Corporate Profile

Strategy Implementation Framework and Group Consolidation of the Value Creation Foundation/
Companies’ Business Reports and Profiles
Commitment to Issues of Materiality

Fact Data

SUGI Pharmacy Group’s Value Creation Story

04

Fact Data

117

118

Financial IndicesNon-financial IndicesSome non-financial information is available only from the fiscal year in which we started data collection, and “-” indicates that the information is unavailable.

(Million yen)

FY 2020

FY 2021

FY 2022

1,391

1,483

1,565

1,718

121

112

107

144

847,543915,322963,270

1,025,379

Number of visitors per year

316,850,068 339,909,390 345,818,315

347,401,865-30,976

Number of visitors per year: Merchandising308,854,178 330,838,009 335,822,636

336,258,041-14,209-5,284

Number of visitors per year: Prescription dispensing

7,995,890

9,071,381

9,887,529

11,143,824

34,62237,406

Number of SUGI Pharmacy point members

18,042,809

19,414,675

20,838,945

22,232,080

Number of SUGI Pharmacy app downloads*2

6,018,926

8,331,741

10,442,740

12,017,141

161,060

368,644622,034

950,695

Number of prescription dispensing pharmacies

1,050

1,166

1,220

1,283

Percentage of prescription dispensing stores (%)

82.9

85.5

84.4

81.8

28

43

FY 2019

FY 2020

FY 2021

FY 2022

FY 2023

Net sales

542,361

602,850

625,477

667,647*1

744,477

Numbers representing the Company

Operating income

30,15934,041

32,13731,65836,622

Number of stores*1

Ordinary income

31,47335,33333,08232,391

38,039Number of new stores

Profit attributable to owners of parent

20,782

21,12019,38919,007

21,979Year-end total square meters of sales floor (m2)

Depreciation

8,412

9,940

11,26812,362

14,121

Numbers relating to customer base

Net cash provided by (used in) operating activities

45,35334,027

7,174

38,27939,041

Net cash provided by (used in) investing activities-18,422-29,254-23,892-23,256

Net cash provided by (used in) financing activities-4,895-5,274-5,295

Cash and cash equivalents at end of period

56,34755,84533,831

End of consolidated fiscal year
Net assets

182,750

200,629

213,890

216,538

233,362

Number of Family Pharmacy app downloads

Total assets

313,757

345,933

334,758

351,895

390,563

Numbers relating to prescription dispensing

Per share information (yen)Net income*2

112.07113.89104.56103.82121.46

Net assets*2

985.491,081.90

1,153.42

1,196.68

1,289.59

80

80

80

80

80

Dividend

Number of prescriptions filled
Number of health support pharmacies

Management indices (%)

10,101

11,73012,913

14,759

16

16

14

14

58.2

58.0

63.9

61.5

59.8

Local alliance pharmacies

-

39

46

21

Return on equity (ROE)

11.9

11.0

9.4

8.8

9.8

Pharmacies allied with specialized medical institutions

-

2

3

3

-

2.4

2.2

2.1

541

556

565

601

146,794

160,411

176,037

189,109

13

13

14

16

14,59017,913

18,847

17,291

8.3

8.6

9.6

9.9

10.2

12.2

14.4

11

51

113

Return on total assets (ROA)

10.9

10.7

9.7

9.4

10.2

Percentage of prescription dispensing of drugs that
require special management (%)*3

Payout ratio

23.8

23.4

25.5

25.7

22.0

Numbers relating to function updates for an aging society
Number of stores providing home-visit prescription
dispensing services
Total number of customers who used home-visit
prescription dispensing services (annual)

All stores: Corporate group as a whole

+11.0

+11.2

+3.8

-*1

+11.7

All stores: SUGI Pharmacy operations*2

+13.8

+12.7

+5.3

+8.0

+12.4

Number of home-visit nursing stations

Existing stores: Corporate group as a whole

+5.1

+4.3

-0.7

+3.1

+7.0

Total number of customers who used home-visit
nursing services (annual)

Existing stores: SUGI Pharmacy operations*2

+5.9

+4.7

0.0

+3.6

+7.3

Numbers relating to private brands
Percentage of private brand sales (%)

Indices on prescription dispensing information

105,279

117,597

132,743

142,461

158,777

Percentage of eco-friendly private brand products (%)*4

Number of prescriptions filled (thousand sheets)

9,833

10,101

11,73012,913

14,759Numbers relating to the supply chain

Prescription cost (yen)10,707

11,642

11,318

11,033

10,758

Number of private brand contract manufacturers that
conducted plant checks (cumulative)

Sales of prescription dispensing*1: As the Company has applied “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 28, March 31, 2020) and related guidance (hereinafter,“Accounting Standard, etc.”) since the beginning of the fiscal year ended February 28, 2023, the figures stated for FY 2022 and later years are calculated byapplying the Accounting Standard, etc. For this reason, percentage changes from the previous fiscal year are not presented for FY 2022. *2: On March 1, 2024,
we conducted a 3-for-1 stock split of common stock. Net assets per share and net income per share are calculated as if the stock split had been carried out atthe beginning of FY 2019.

3

Fact Data

Equity ratio

Annual sales growth rate (%)

119

Number of home-visit prescription dispensing centers

FY 2023*1: This indicates the number for the entire SUGI Pharmacy Group. (The non-financial information shown on this page does not include numbers of Nihondoand Hikari Pharma.) *2: This is the number since the revamp of the app in October 2018. *3: Percentage of drugs that require special management (narcotics,
raw materials for stimulants, psychotropic drugs, and toxic substances) to the prescription dispensing of all drugs. *4: Percentage of eco-friendly products to all
private brand products.

120

FY 2020

FY 2021

FY 2022

FY 2023

FY 2021

FY 2022

FY 2023

2,005

2,126

2,169

2,321

1,692

1,768

1,854

2,020

313

358

315

301

15.6

16.8

14.5

13.0

-

-

4,099

4,605

Number of employees with foreign nationality

472

454

433

566

Numbers relating to diversity and work style

Numbers relating to contribution to the enhancement of community safety and security (cumulative)

Number of managers

60

75

84

100

Comprehensive agreements

13

19

26

39

Watching-over agreements

10

10

11

11

Disaster risk reduction agreements

34

38

39

42

Agreements on the environment, etc.

3

8

8

8

Total number of AEDs donated to facilities for senior citizens

182

217

255

298

Number of employees with disabilities

370

411

440

508

Total number of stores where AEDs are installed

130

180

231

282

Percentage of employees with disabilities (%)

2.36

2.43

2.58

2.80

Total number of first-aid kits donated to local governments, etc.

962

962

1,068

1,744

Number of employees who took parenting leave

697

805

448

525

Men

46

84

79

107

Women

651

721

369

418

-

-

86.6

84.6

27.9

43.6

53.0

55.7

-

-

100.0

97.4

368

508

603

660

Men

10

18

15

29

Women

358

490

588

631

93.7

97.7

95.2

98.7

Total number of agreements

Numbers relating to employees

Men
Women
Percentage of female managers (%)
Number of regional full-time employees

7,308

7,727

8,724

Men*1

3,540

3,804

4,016

4,546

Women*1

3,170

3,504

3,711

4,178

Percentage of women (%)*1

47.2

47.9

48.0

47.8

-

-

7,727

8,724

11,467

11,77011,692

12,990

63.1

61.7

60.2

59.8

695

727

533

372

Men

100.0

100.0

100.0

98.9

Men

234

245

176

157

Women

92.6

97.9

94.7

98.6

Women

461

482

357

215

12

13

16

29

227

402

389

983

Men

0

1

1

3

Men

121

213

207

470

Women

12

12

15

26

Women

106

189

182

513

Number of full-time employees re-employed after mandatory retirement

27

21

32

9

Percentage of full-time employees re-employed after mandatory retirement (%)

93.1

90.5

90.6

100.0

Number of pharmacists

3,025

3,390

3,688

4,021

-

-

3.1

3.2

Number of registered pharmaceutical distributors

8,527

9,704

9,019

10,029

466

498

501

468

Regular health checkup rate (%)

99.6

95.3

99.0

99.6

-

87

105

113

Percentage of smokers (%)

15.2

12.0

12.3

11.2

1,208

1,214

1,268

1,222

Percentage of specified health guidance completed (%)

82.2

57.9

40.1

28.4

-

5,259

5,391

5,412

Number of employees who took leave due to a mental health problem

-

-

170

166

Men

-

5,947

5,894

5,982

Number of employees who returned

-

-

68

54

Women

-

4,283

4,782

4,733

Number of employees who left

-

-

51

57

-

65.8

65.3

65.6

308

282

235

267

10,213

10,284

11,23912,578

Number of occupational injury incidents (at work)

205

238

187

209

354

307

652

500

Number of occupational injury incidents (during commutation)

103

44

48

58

100.0

100.0

100.0

100.0

0

0

0

0

Employees working in Japan*1
Number of partner employees (converted into the number of
8-hour workers)*1
Percentage of partner employees (converted into the number of
8-hour workers) (%)*1
Number of new graduates hired

Number of mid-career hires

Number of registered dietitians
Number of nurses
Number of beauty advisors
Average annual salary of full-time employees (thousand yen)

Numbers relating to human resource development
Number of participants enrolled in dementia supporter courses
Training costs for full-time employees (million yen)Compliance training attendance ratio (%)

Percentage of employees who took parenting leave (%)
Men
Women
Number of employees who worked reduced working hours for childcare

Percentage of those returning to work after parenting leave (%)

Number of employees who took nursing care leave

Employee engagement (P)Numbers relating to safety and health

Percentage of employees getting enough sleep (health checkup results) (%)
Number of occupational injury incidents*1: This indicates the number for the entire SUGI Pharmacy Group. (The non-financial information shown on this page does not include numbers of Nihondoand Hikari Pharma.)

Number of fatal occupational injury incidents

Fact Data

6,710

Number of full-time employees*1

121

FY 2020

The non-financial information shown on this page does not include numbers of Nihondo and Hikari Pharma.

122Consolidated Balance Sheet
FY 2020

FY 2021

FY 2022

FY 2023

Numbers relating to the environment*1

43

65

102

1,100

328

507

800

-

-

755,045

CO2 emissions - Scope 1 (t-CO2)

1,729

1,832

2,025

To be calculated

CO2 emissions - Scope 2 (t-CO2)

109,080

148,101

122,992

To be calculated

Tonnage of plastic bags used (t)Water consumption (m3)

CO2 emissions - Scope 3 (t-CO2)

1,669,962

1,700,421

1,715,396

44,376

Securities

8,000

4,000

To be calculated

Inventory

74,503

83,679Others17,32423,563-0-0199,984

199,046

3,117

4,169

375,300

405,420427,679

427,142

Number of stores with LED lighting

1,353

1,454

1,552

1,704

Percentage of stores with LED lighting (%)

97.0

98.0

99.0

99.2

-

0.41

0.41

0.34

0.45

0.41

0.41

0.36

-

2.2

1.8

1.7

Number of Board of Directors meetings held

12

12

12

12

Number of Risk Committee meetings held

58

31

33

31

Number of Board of Auditors meetings held

12

12

14

13

Number of Directors

7

6

5

5

Men

5

4

4

4

Women

2

2

1

1

3

3

2

2

Men

1

1

1

1

Women

2

2

1

1

Percentage of Independent External Directors (%)

42.9

50.0

40.0

40.0

Percentage of female Directors (%)

28.6

33.3

20.0

20.0

Numbers relating to governance, risk and compliance

Number of Independent External Directors

Number of Auditors

3

3

3

3

Allowance for doubtful accounts
Total current assets
Non-current assets

Total current liabilities

117,015

136,648-

521

Long-term borrowings

7,063

7,571

Land

8,583

12,006

Others

2,995

3,126

Construction in progress

2,001

4,316

Total non-current liabilities

18,341

20,552Others45,42553,086135,356

157,200

Accumulated depreciation-32,608-37,396

Others (net)12,817

15,690Total property, plant and equipment 91,913

107,863

Capital15,434

15,434

8,121

10,355

Capital surplus

24,632

24,632Retained earnings

194,155

211,310

5,195

14,995

Treasury shares-18,215-18,198

263

5,929

5

5

Total shareholders’ equity

216,007

233,178

Deferred tax assets

14,66917,312

Guarantee deposits

28,902

31,373

378

174

2,868

3,708

-27

-27

Intangible assets
Investments and other assets
Investment securities
Shares of subsidiaries and associates
Long-term loans receivable

100.0

100.0

OthersPercentage of female Auditors (%)
Annual number of calls to “Anything Consultation Call Service
for All Workplace Concerns”

33.3

33.3

33.3

33.3

Allowance for doubtful accounts

3,372

18,312

Asset retirement obligations

100.0

4,437

15,44675,849

100.0

5,463

Others

68,510Percentage of Independent External Auditors (%)

7,229

2,970

Buildings and structures (net)1

Number of complaints

1,488

9,333

1

-

Provision for bonuses

8,282

1

-

17,278Retirement benefit liability

1-18,059Contract liabilities-58,895

Women

-

7,149

-52,261

2

Number of occurrences of human rights issues

4,981

Income taxes payable

Accumulated depreciation

2

1,483

316

134,744

2

1,585

-

Current portion of long-term borrowings

120,771

Buildings and structures

2

1,254

90,621

Non-current liabilities

Property, plant and equipment

Men

832

77,038

Accounts payable – trade

Total investments and other assets
Total non-current assets
Total Assets

51,87673,297

151,911

191,517351,895

390,563

Total Liabilities
Net Assets
Shareholders’ equity

Accumulated other comprehensive
incomeValuation difference on
available-for-sale securities
Foreign currency translation
adjustment
Remeasurements of defined
benefit plans

-

4

153

4

Total accumulated othercomprehensive income

531

183

216,538

233,362

351,895

390,563

Total Net Assets
Total Liabilities and Net Assets

Fact Data-

Return ratio (%)

Current liabilities

37,514-

Food waste ratio (%)

Current assets

Accounts receivable – trade

To be calculated

Renewable energy consumption (thousand kWh)

Liabilities

43,427314,266

Prescription drugs waste ratio (%)

As of the end of FY 2022 As of the end of FY 2023
(Feb. 28, 2023)(Feb. 29, 2024)

62,642

307,889

Gasoline consumption of company cars (liters)

As of the end of FY 2022 As of the end of FY 2023
(Feb. 28, 2023)(Feb. 29, 2024)

Cash and deposits

279,619

Electric power consumption (thousand kWh)(Million yen)

Assets144

Number of plastic bags used (million bags)(Million yen)

*1: This does not include numbers of Nihondo and Hikari Pharma.

123

124

Consolidated Statement of Income and Consolidated Statement(Million yen)of Comprehensive Income
FY 2022(Mar. 1, 2022 to Feb. 28, 2023)

FY 2023(Mar. 1, 2023 to Feb. 29, 2024)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Salaries, allowances and bonuses
Provision for bonuses
Retirement benefit expenses
Rent expenses
OthersTotal selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Gain on donation of non-current assets
Rental income
OthersTotal non-operating income
Non-operating expenses
Interest expenses
Rental costs
Loss on retirement of non-current assets
OthersTotal non-operating expenses
Ordinary income
Extraordinary income
Gain on sale of non-current assets
Total extraordinary income
Extraordinary losses
Impairment loss
Loss on valuation of investment securities
Total extraordinary losses
Profit before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Profit attributable to owners of parent

667,647
465,123
202,524

744,477
515,639
228,837

69,8981,463
1,439
34,687
63,377
170,865
31,65876,652
2,878
1,646
37,77073,267
192,215
36,622

160
2
312
1,934
572
2,982

602
16
634
2,027
499
3,780

16
1,675
230
325
2,249
32,391

15
1,759
307
280
2,363
38,039

1,002
1,002

-

5,208
5,208
28,184
10,587-1,409
9,177
19,00719,007

4,964
972
5,936
32,102
12,592-2,46910,122
21,97921,979(Million yen)

FY 2022(Mar. 1, 2022 to Feb. 28, 2023)

FY 2023(Mar. 1, 2023 to Feb. 29, 2024)

Profit before income taxes

28,184

32,102

Depreciation

12,362

14,121

Impairment loss

5,208

4,964

Increase (decrease) in provision for bonuses

-411

1,431

Increase (decrease) in retirement benefit liability

904

825

-0

-0

-163

-618

-

972

-164

-248

16

15

Net cash provided by (used in) operating activities

Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Loss (gain) on valuation of investment securities
Gain on donation of non-current assets
Interest expenses
Loss (gain) on sale of non-current assets-1,002-

Loss on retirement of non-current assets

6

22

Decrease (increase) in trade receivables-3,922-6,577

Decrease (increase) in inventories-2,901-9,170

Increase (decrease) in trade payables

5,976

13,461

Increase (decrease) in contract liabilities

794

-780

OthersSub-total

Consolidated Statement of Comprehensive
IncomeNet income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Breakdown)Comprehensive income attributable to owners of parent

125

FY 2022(Mar. 1, 2022 to Feb. 28, 2023)

FY 2023(Mar. 1, 2023 to Feb. 29, 2024)

19,007

21,979

-686
522
-164
18,842

-203
4
-148
-347
21,632

18,842

21,632-788
49,732

Interest and dividends received

9495

Interest paid

-14

-13

Income taxes paid

-7,234-10,772

Net cash provided by (used in) operating activities

38,27939,041-79,020-43,000

Net cash provided by (used in) investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits

81,00064,000Purchase of securities-26,000-20,000

Proceeds from redemption of securities

26,00025,000Purchase of property, plant and equipment-18,192-30,836

Proceeds from sale of property, plant and equipment

1,273

2

Purchase of intangible assets-3,320-1,864Purchase of investment securities-2,207-10,626--5,696-2,707-4,013317

238

Purchase of shares of subsidiaries and associates
Payments of guarantee deposits
Proceeds from refund of guarantee deposits
Purchase of shares of subsidiaries resulting in change in scope of consolidation
Others(Million yen)

545
45,434

Net cash provided by (used in) investing activities--2,773-399-1,406-23,256-30,976

Fact Data

Consolidated Statement of Income

Consolidated Statement of Cash FlowsNet cash provided by (used in) financing activities
Purchase of treasury shares
Repayments of finance lease obligations
Dividends paid
OthersNet cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents-8,931

-0

-365

-382

-4,912-4,825-0-75-14,209-5,284

-22

3

790

2,784

Cash and cash equivalents at beginning of period

33,831

34,622

Cash and cash equivalents at end of period

34,62237,406

Net increase (decrease) in cash and cash equivalents

126

Stock Information

Corporate Profile(As of February 29, 2024)

Stock information

Corporate profile

Total number of shares authorized to be issued by the Company: 200,000,000

Trade name:

SUGI Holdings Co., Ltd.

Total number of issued shares: 63,330,838

Established:

March 8, 1982

Number of shareholders: 35,349

Capital:15,434,588,000 yen

Number of employees: Number of full-time employees: 8,724 (on a consolidated basis)

Major shareholders (top 10)

Number of partner employees: 12,990** Number of partner employees converted into the number of 8-hour workers

Number of shares held
(thousand shares)

Shareholding
ratio (%)

Sugi Shoji Co., Ltd.

22,577

37.42

The Master Trust Bank of Japan (trust account)

6,615

10.96

Sugi Asset LLC

3,019

5.00

CEP LUX−ORBIS SICAV

2,203

3.65

STATE STREET BANK AND TRUST COMPANY 505223

1,889

3.13

Custody Bank of Japan, Ltd. (trust account)

1,772

2.93

Tsuruha Co., Ltd.

1,272

2.10

THE BANK OF NEW YORK MELLON 140051

1,118

1.85

STATE STREET BANK AND TRUST COMPANY 505103

843

1.39

MSIP CLIENT SECURITIES

648

1.07

Name

Major operations:

Business management of the entire Sugi Pharmacy Group

Headquarters:

62-1 Shin'e, Yokone-machi, Obu-shi, Aichi 474-0011, Japan

Main store:

1-8-4 Mikawa Anjo-cho, Anjo-shi, Aichi 446-0056, Japan

Officers(as of May 22, 2024)
Representative Director & Chairman: Eiichi Sakakibara
Representative Director & President: Katsunori Sugiura
Director & Senior Vice President: Shinya Sugiura
External Director: Shigeyuki Kamino
External Director: Shiro Uchida
External Director: Hideaki Takaishi
External Director: Kaseri Oura
External Full-time Auditor: Toshihiko Sakamoto

Notes: 1. The Company holds 3,011,460 shares as treasury stock, but it is excluded from the list of major shareholders above.
2. Shareholding ratio is calculated after deducting treasury stock.

External Full-time Auditor: Toshiaki Shimura
External Auditor: Kana Yasuda
Auditor: Yoshiko Hayama

Editorial Policy
The Integrated Report 2024 has been edited for the purpose of presenting the SUGI Pharmacy Group’s businessphilosophy and attitude toward sustainability and providing stakeholders with easy-to-understand explanations of
our activities carried out based on them and their results. The report contains data and articles regarding thecorporate activities that we deem especially important.

Coverage Period
March 1, 2023 – February 29, 2024
For some activities, more recent events have also been reported.

Fact Data

Reporting Coverage
The report has been designed to cover the companies in the consolidated financial statement of the SUGI Pharmacy
Group to the extent possible, although the reporting coverage varies according to the item.

Reference Guidelines
・International Integrated Reporting Framework,
International Integrated Reporting Council (IIRC)
・Guidance for Collaborative Value Creation,
Ministry of Economy, Trade and Industry
Notes on Our Outlook
The Integrated Report 2024 presents forecasts and outlooks regarding future plans, strategies and business resultsof the SUGI Pharmacy Group and its subsidiaries. They are based on assumptions and views judged from theinformation currently available to the SUGI Pharmacy Group. Please note that actual business results may differ fromthe outlook due to risks and uncertainties concerning future economic trends, consumer spending, market demand,
taxation, various systems, etc.

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