62-1 Shin’e, Yokone-machi, Obu-shi, Aichi, 474-0011 TEL: 0562-45-2700 FAX: 0562-45-2702 https://www.sugi-hd.co.jp/

Profile

The SUGI Pharmacy Group strives to contribute to
local communities by underpinning customers’ healthy,rich lifestyles and community healthcare.

SUGI Pharmacy GroupThe history of the SUGI Pharmacy Group began in 1976 from just a 16-tsubo pharmacy in Nishio, Aichi.

Drugstore operation

Home-visit nursing and elderly homecare support(1 tsubo = approx. 3.3 m2.) Supported since then by local customers for whom we serve as an operator of

Promotion of disabled employment

SUGI Smile“family drugstores,” we now run approximately 1,300 stores mainly in the Kanto, Chubu, Kansai and
Hokuriku regions.

Contents

In addition, we have evolved into an operator of community-healthcare drugstores where not only
prescription dispensing services but also home healthcare services are available. By assigning highlyspecialized human resources, such as pharmacists, beauty advisers and nationally certified dietitians,
we live up to the trust placed in us by local customers mainly through counseling services.
In this age of the super-aging society, we promote the lifetime wellness of local residents in fields
ranging from primary prevention and secondary prevention, to medical treatment, elderly nursing careand terminal care.

Editorial Policy
This report has been edited for the purposeof presenting the SUGI Pharmacy Group’sbusiness philosophy and attitude towardsustainability, and providing stakeholders
with easy-to-understand explanations on
our activities that are carried out based on
this philosophy and attitude, and theirresults. The report contains data and articles
regarding our corporate activities that wedeem especially important.

Corporate Philosophy ����������������������������������������� 2
Management Messages ������������������������������������� 4
Feature Article—
Strategy Explained by Vice President ������������� 6
The Growth of the SUGI Pharmacy Group ����������� 8
SUGI Pharmacy Group Today ����������������������������� 10
Value Creation Process ��������������������������������������� 12
Mid-Term Management Plan 2022 ��������������������� 16
Sustainability & Priority Issues ����������������������� 18
Corporate Governance ����������������������������������� 30
Data Section ��������������������������������������������������� 36

Sugi Holdings Report 2020

1

Corporate Philosophy

The SUGI Pharmacy Group will remain a “pharmacy.”This is the pride of the corporate group andthe pride of all employees.
Since our founding, we have aimed to contribute to local communities by selling ­medical and pharma-

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

ceutical products, health foods, cosmetics and daily items, and by dispensing prescriptions. Today, evenafter we developed into an operator of a chain of approximately 1,300 drugstores with approximately

Vision28,000 employees, we are proud that we will remain a “pharmacy.” We are working to further enhanceour ­corporate value and accomplish sustainable growth of local communities.
Highly acclaimed for its sincere and kind treatment of customers, each of whom was served attentively
through its counseling service, our first store thrived as a kind “family pharmacy.” Since then, we haveadopted the corporate watchwords of “kindness, honesty and trust” as the principles guiding us to growth.
A layer of “kindness” forms “honesty” and leads to the establishment of “trust.” These tenets presented
in our corporate watchwords, together with an altruistic spirit, or “sincerity,” are reflected in our management philosophy showing our fundamental values. They have been anchored among all members of ourcorporate group and put into practice.

We strive to become a close, handy, andreliable partner underpinning the health, hygiene, comfort,
and security of local communities.
Our Pledge
We will continue to make decisions and take action from theperspective of customers.
We will continue to pursue innovation in anticipation of changes
both inside and outside our company.

Action with “sincerity” based on the tenets of our corporate watchwords and management philosophy with
their focal point on “kindness,” which has been the unchanging focus since our establishment, reinforces

We will continue to expand and deepen our capabilities andgrow together with our company.

our business and HR foundation, helps customers smile, and makes them pleased and moved. This leads to

We will continue to be honest.

the happiness of employees and the growth of the SUGI Pharmacy Group loved by local communities.

We will continue to respect diversity.

Management Philosophy
Corporate
Watchwords
Kindness
Serve customers with sincerity
and kindness.
HonestyWork with business partners
with humility and honesty.
Trust
Be trusted by both customers
and business partners.

Management
Philosophy<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.

<For Employees>

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

Strive to create a corporate framework
enabling the company to grow together
with employees with the aim of ensuring
their happiness.
(At the time of the establishment of the company)

2

Sugi Holdings Report 2020

Sugi Holdings Report 20203

Management Messages
What we aim for with our unchanged determination
since our establishment has made us what we aretoday and will pave the way to the future.

Hirokazu Sugiura

Eiichi Sakakibara

Representative Director & Chairman

Representative Director & President

SUGI Holdings Co., Ltd.

SUGI Holdings Co., Ltd.

As a pharmacist, I established SUGI Pharmacy in 1976 in Nishio, Aichi, toservices more than ever, and further cultivate the fields of primary preven-

The strongest points of the SUGI Pharmacy Group lie in our humanand the increase in our corporate value, we would like to fulfill our social

provide pharmaceutical support for local residents to enjoy healthy life-

tion and secondary prevention. To this end, we are committed to provid-

resources, who embody the concept “kindness” for each customer based

responsibility and foster human resources who can embody the aforemen-styles and contribute to the local community.

tioned management philosophy on a voluntary basis.

ing a full lineup of services, ranging from advice on customers’ dailyon his/her needs and in our management system designed to support such

In the SUGI Pharmacy Group, we uphold the corporate watchwords oflifestyles, such as diet and exercise, to support for alleviating customers’

human resources. We take advantage of every opportunity to ensure that

At our corporate group, we think that in order to unite such human“kindness, honesty and trust,” which have been passed down for 44 years

symptoms, in cooperation with not only our pharmacists, but also ourour management philosophy, which we have adopted as the principles

resources and their organizations, we must inevitably ensure good corpo-

since our establishment. “Kindness” serves as the starting point of the ties

nationally certified dietitians.

guiding us to growth, is anchored in each employee and is put into practice.

rate governance. We have therefore established a corporate governanceformed between all of our stakeholders—including customers and employ-

The current global spread of COVID-19 is continuing to stir anxiety

When employing and training pharmacists, beauty advisers, nationally cer-

system and implemented the necessary measures. To mention just a few

ees—through their smiles, and if such smiles spread among many moreamong citizens about their daily lives, especially in terms of society, thetified dieticians and other specialists, we always place our emphasis onof these, we have not only a board of directors and a board of auditors,

people, the ties will further expand. By ensuring this process, we are aiming

economy and medical care. Filled with a sense of mission as a drugstore

human resources who can embody our management philosophy on a vol-but also a nomination and remuneration committee established at ourto contribute to the sustainable growth of local communities from theoperator focusing on prescription dispensing and home healthcare ser-untary basis. By continuing these efforts, we can cultivate our employees’

own discretion, with two of its three members being outside directors.

perspective of an operator of community-oriented, kind, family drugstores.

vices, we are continuing to manage approximately 1,300 stores throughsense of belonging and pass that on to new employees. We are confident

Moreover, to prepare for contingency situations that might gravely affect

Our corporate group’s business model was greatly affected by the U.S.

the united efforts of all members of the corporate group. It is highly likelythat this cycle makes our corporate group’s growth real and sustainable.

our corporate group’s operations, such as large-scale disasters and pan-inspection tour that we made right after our founding. As the first pre-that Japan and the rest of the world will experience a major turning point,

We would like to squarely address a wide variety of social problems,

scription dispensing drugstore in Japan, we have been focusing on

which will bring considerable changes to economic and social customs,

such as the SDGs, all the more because the main operation of our corpo-

highly-specialized counseling services and prescription dispensing ser-institutions, and patterns of consumption. No matter what changes willrate group concerns medical care, an important aspect of social contribu-

Finally, we believe that our continuous growth requires not only mid-

vices. We have laid our present foundation by providing counseling ser-occur, we will respond flexibly based on our management philosophy,

tion. With this background, in FY 2019, we established the Sustainability

to long-term investment in human resources, stores, systems and equip-

vices well-tuned to each customer and implementing strategies properly

conduct daily reviews to identify how to continue to present appropriate

Basic Policy, designed to focus on the following four issues regarding

ment, but also a further increase in shareholder returns. Our specificbased on the needs of today’s super-aging society and the needs ofvalue for customers and society, continue taking on challenges in a widesustainable corporate activities: Creation of products and services thatpolicy regarding shareholder returns is to distribute dividends on a stable,

health-conscious customers.

variety of fields, and create a future so that we can celebrate not only the

support perpetual healthy living; Development as a regional base that

continuous basis, while striving to achieve a payout ratio on a consoli-

50th anniversary of our establishment, which will come soon, but also the

supports the safety and security of all people; provision of a workplace

dated basis of 30% at an early stage. We will continue to operate based

anniversary that will come in another 50 years.

environment where employees can work comfortably and play active roles;

on our management philosophy and make steady progress towardand efficient and environmentally friendly use of products and resources

becoming an entity that can continue to grow 10 years ahead and evenby eliminating overdo, waste and unevenness. By addressing these four

20 years ahead. In this regard, we sincerely would like to ask for yourissues and striking the best balance between the solution of social issues

warm support.

A surge in medical costs is unavoidable in a rapidly aging society. To
address the national challenge of extended healthy lifespans, it is essential to improve our prescription dispensing services and home healthcare

4Sincere, kind services make the SUGI Pharmacy Groupsustainable. We are seeking to continue to grow overthe next 10 years, and even the next 20 years.

Sugi Holdings Report 2020

demics, we also have a risk committee to conduct discussions and makedecisions regarding preventive and responsive measures.

Sugi Holdings Report 20205

Feature Article

Strategy Explained by Vice President

Three Growth Strategies to Enhance Our Corporate Value
Total Healthcare Strategy to maximize customers’
lifetime value
In order for the SUGI Pharmacy Group to accomplish even more
growth, we need to use digital technology to ensure contact points
with customers at all stages, ranging from primary prevention andsecondary prevention to medical treatment, elderly nursing care andterminal care, and to provide support for the healthy daily lives of
local residents mainly through our corporate group’s strong points,
namely stores, human resources and our ties with local communities.
This constitutes our corporate group’s Total Healthcare Strategy.
To satisfy each customer on a continuing basis at every healthstage from his/her birth until the end, we will endeavor to enhance ourcustomers’ lifetime value through a network formed mainly by physicalstores and a digital network of, for example, smartphone apps.

Promoting the Total Healthcare Strategy tounderpin people’s health from a wide variety of
aspects, and developing our stores to serve
as a platform for supporting their health

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

Business Environment and Requirements for Drugstores
Responding to the super-aging society and taking­advantage of digital technology to ­present a newform of customer experience
For the domestic business environment, it is expected that society will
experience not only a change in demographics caused by thesuper-aging society and a decrease in the working-age population,
but also an accelerated change in the industrial structure due to AI,
IoT and other types of technological innovation.
Since the beginning of the 2000s, the drugstore market has
grown considerably, mainly in the field of healthcare, including prescription dispensing, and also in the field of sales of food products.
Advancement of the aging society is pressuring the medical budget,
leading to a growth in demand in the areas of primary prevention/
secondary prevention and elderly nursing care/daily life support, andto a rise in the expectations placed on drugstore operators with theirfocus on local communities.
The entire retail industry is seeing a very rapid introduction ofdigital technology, and also a change in consumer behavior. Whenpurchasing products and services, consumers today check social
media to collect information that satisfies their needs, instead of
depending on conventional forms of media, such as newspapers andTV commercials, which are used to disseminate information based on
mass-marketing. Consequently, it is becoming increasingly important
to conduct not only the conventional forms of mass-marketing, but

6

Sugi Holdings Report 2020

also One-to-One marketing to provide individuals with information on
products and services catering to their needs.
It is, of course, significant to pursue efficiency and convenience bymaking good use of AI, IoT, etc. to provide products and services tocustomers. Regardless of the extent of the progress of digitization,
however, we believe that we will eventually be required to enable
customers to experience face-to-face communication at physicalstores, and make our products, services, and customer treatment serveas an opportunity to forge long-lasting ties with such customers.
On the other hand, when looking at the prescription dispensing
market, we note the Pharmacy Vision for Patients, released by the
Ministry of Health, Labour and Welfare. The ministry is expecting
prescription dispensing pharmacies to make a shift by 2035 from thepresent operation style as “pharmacies located near medical institutions to support the separation of dispensing and prescribing functions.” There is a call for prescription dispensing pharmacies to play amajor role in the comprehensive community care system, and to
become 24-hour home healthcare and health support providers
through the use of IoT. Prescription dispensing pharmacies are
required to transform themselves into “pharmacies to support the
separation of dispensing and prescribing functions with their focus on
local patients.” High expectations are placed on pharmacies to serve
as family pharmacies from which local residents can seek pharmaceutical advice on medicines without hesitation at any time, and to carryout high-level pharmaceutical management.

Evolution to a next-generation store model serving
as a health station
To further improve our physical stores, we will evolve the existingmodel into a next-generation store model to address the super-aging
society. To this end, we will focus on the development of community
healthcare stores featuring medical institutions, elderly nursing centers, patient nursing stations, etc.
For community healthcare stores, we will reinforce the development of not only “pharmacies with the function of prescription dispensing,” which is one of our advantages, but also “pharmacies
featuring medical malls or clinics” to serve as a bridge between local
patients with even better medical care. In addition, we will also promote the development of “on-the-premises” pharmacies. Unlike

so-called “pharmacies located near medical institutions,” such pharmacies are situated on the premises of medical institutions to support
increasingly sophisticated medical care and accommodate the needsof both doctors and patients. By developing these three types ofcommunity healthcare stores, we will evolve into an operator ofhealth stations with a focus on local communities.
Furthermore, to respond to changes in social needs, such asincreases in the number of senior citizens who find it difficult to go
shopping and the number of double-income couples, we will improve
our lineup of microwave meals and so-called “smile care foods” forsenior citizens, and thereby strive to develop into an operator of evenmore convenient, one-stop shopping centers.

Creating new value through cooperation withlike-minded stakeholders
We will present a wide variety of suggestions to create new value inthe belief that we can cause innovation in the healthcare industry byintegrating physical stores, highly specialized human resources, suchas pharmacists and nationally certified dieticians, and future digitaltechnology.
As a corporate group aiming to develop a business model to caterto all customers at their different health stages, we strive to establish
close ties with and gain the trust of local governments, companies
and their health insurance associations, and medical and elderly
nursing-care workers. To provide even more in-depth services evenmore extensively and promptly, we would like to promote our strategy
through cooperation and collaboration with like-minded local governments and companies.

Continuing to Improve the Quality of Our Operations All the More Because
Our Operations Themselves Contribute to Society
Presently, we are pushing forward with the Total Healthcare Strategy,
thereby facilitating our expansion in terms of both quality and quantity. We understand that this means that our social responsibilities arealso increasing considerably. A wide variety of social challenges are
now becoming evident and more serious, including the aging population, lower birthrate and a declining population in Japan, as well asclimate change, resource problems and human rights issues both athome and abroad.
We are confident that our operations themselves, which areintended to accommodate local needs with our foothold in pharmacies and drugstores, contribute to local communities and society. We
believe that we can achieve sustainable corporate growth if we canrealize our corporate group’s management philosophy by acting as acorporate group focusing on local communities, adapting to socialchanges, living up to the demands and expectations of stakeholders,solving social problems and contributing to the formation of a sustainable society.

Sugi Holdings Report 20207

00 Toward an Operator of “Family Drugstores” Serving as the
売上高（億円）The Growth of the SUGI Pharmacy Group00

00

Cornerstone of Lifetime Support
Group displays a firm sense of determination especially in terms of prescription dispensing services. This has led us to take on the challenge
have been working on the provision of home healthcare services since our early days in order to serve as a vital part of the infrastructure for
local communities by providing services truly required by customers and underpinning the super-aging society. We will secure a wide varietyof contact points between customers and our human resources, who boast high-level expertise and who have inherited our sense of deter-

4,000

mination since our establishment, plus digital contact points through the use of apps, for which demand is expected to grow in the future. In

2005~this way, we will endeavor to present value required by customers.

1976~

Expansion of the scale ofour operation through M&A

2002~

Original business model
Prescription dispensing drugstore

3,000

Expansion of the operatingarea into the Kanto andKansai regions

Launch as a small “family pharmacy” inNishio, Aichi

Launch of home-visit
prescription dispensing service

Launch of home-visit
nursing service

2,000

Launch of healthcommunity activities

2008

2002

2013

Establishment
1,000

The number of drugstores exceeds

1976
'76

'82

'88

'89

1990
'90

'91

'92

'93

'94

1995
'95

'96

'97

'98

100

'99

2000
'00

The number of drugstores exceeds

'01

'02

'03

'04

2005
'05

'06

500

'07

The number of drugstores exceeds

'08

'09

2010
'10

'11

'12

'13

'14

2015
'15

'16

'17

1,000

'18

2019
'19
(FY)

0
Net sales(100 million yen)

Milestones of the SUGI Pharmacy Group

2000~2010
Operation
development■ Expansion into the Kansai region (2002)■ Launch of home-visit prescription dispensing service (2002)■ Acquisition of 50.1% of the stock of Japan Co., Ltd., making thecompany a consolidated subsidiary (2005)■ Launch of drugstores featuring medical malls (2005)■ Expansion into the Kanto region (2006)

2011~2020■ Acquisition of full ownership of Japan Co., Ltd. (2007)■ Acquisition of full ownership of Izuka-yakuhin Co., Ltd. (2008)■ Establishment of SUGI Holdings Co., Ltd. (2008)■ Establishment of SUGI Medical Co., Ltd. and launch of home-visit
nursing and elderly home-care support services (2008)

2000~2010
Community
healthcare
Socialcontribution

8

5,000

Consolidation of our foundation and framework for growthEstablishment of our administration organization, management accounting
system, HR system, many other systems, and logistics infrastructureof developing a chain of prescription dispensing drugstores, which were still rare in Japan at the time of our establishment. In addition, we

00
0Offensive management approach
Development of the Total Healthcare Strategy

2015~Partly because both the present Chairman Hirokazu Sugiura and the present Adviser Akiko Sugiura are both pharmacists, the SUGI Pharmacy

00

00

2018~

6,000

Sugi Holdings Report 2020

■ Establishment of a training center to foster pharmacists (2001)■ Establishment of stores featuring clean rooms to provide
terminal care (2003)■ Establishment of key stores serving as the hub of acommunity healthcare network, and launch of healthcommunity activities (2013)■ Launch of rental and sales of welfare products (2014)■ Completion of the Obu Center (our logistics center)(2016)■ Expansion into the Hokuriku region (2017)■ Conclusion of a capital and business alliance with the
MedPeer Group (2018)■ Conclusion of a capital and business alliance with M-aid
Inc. (2018)■ Establishment of MCS Co., Ltd. as a company that
recruits and staffs medical workers (2018)■ Establishment of DCP Solution Co., Ltd. to provide
support for doctors to open clinics (2018)■ Launch of specific health guidance (2019)■ Establishment of an “on-the-premises” pharmacy(Nagoya University Hospital Store) (2019)■ Conclusion of a capital and business alliance with
Inagora Holdings Co., Ltd. (2020)■ Establishment of S Trading Co., Ltd. to supply products toforeign markets (2020)2011~2020■ Establishment of the CSR Office and participation in the Pink Ribbon
Campaign (2008)■ Establishment of SUGI Smile Co., Ltd. to promote disabled­employment (2009)■ Launch of cosmetic therapy at facilities for senior citizens andhospitals (2009)■ Launch of donation of AEDs to facilities for senior citizens (2013)■ Launch of donation of medical wigs to breast cancer patients (2013)■ Launch of support for children with intractable diseases and their families (2014)■ Launch of a program of comprehensive partnership agreements with local ­governments(2017)■ Conclusion of a partnership contract with FC Kariya, a member of the top division of anonprofessional soccer league sponsored by companies in the Tokai region (2018)■ Acquisition of Platinum Kurumin certification (2018)■ Launch of a demonstration test for a shared pick-up and drop-off service in Toyoake,
Aichi (2018)■ Acquisition of certification as an outstanding enterprise in terms of health and productivity management (2020)

Sugi Holdings Report 2020

9

SUGI Pharmacy Group Today

スギ薬局様

イラストレーション

Business Environment Surrounding the SUGI Pharmacy GroupStoresMarket share in the drugstore industry and the prescription dispensing pharmacy industry (FY 2018)
Drugstore market

Prescription dispensing pharmacy market

Market share of the top 10 companies

Market share of the top 10 companies

Drugstore
market scale

7.2 trillion yen
Approx.

70%

There has been extremely slow
progress toward an oligopolistic
market, with mid- and small-scale
pharmacies accounting for
approximately 80% of the market.
At the same time, there has beenremarkable growth in prescription
dispensing drugstores, leading toongoing change in the mainmarket players.

Approx.

There is no extreme concentration of market share among the
top companies, meaning thatsignificant changes in the constitution of the present market
share situation can occur as aresult of each company’s strategy
or the development of alliancesor partnerships.

● No. of stores18%

Prescription
dispensing pharmacy
market scale

7.4 trillion yen* Data source
Drugstore data: Drugstore Fact-Finding Survey by the Japan Association of Chain Drugstores; prescription dispensing data: Trend Survey for Medical and Prescription Dispensing Costs by the
Ministry of Health, Labour and Welfare; and documents released by each company in the industry
スギ薬局様

A 調剤

B 店舗

1,287

97

0000 00000
00000 0

Hokuriku area

Up
stores fromthe previous year

C お客様

13

storesKansai area
Kanto area

451

■ SUGI Pharmacy:344

1,163 stores(Including 930 prescription dispensing stores)■ Our subsidiary

D 従業員

E 来店客数Japan:
Percentage of prescription
F スギ薬局カード会員数
dispensing stores■ Home-visit nursing
stations:

80.0%

イラストレーション

Chubu area

113 stores479

11 stores

Figures relating to the SUGI Pharmacy Group (FY 2019)● Net sales on a consolidated basis

541.9

スギ薬局様

11.0

■ PrescriptionUp% fromthe previous year

billion yen● Operating income on a consolidated basis
スギ薬局様

イラストレーション

29.7

22.0%

dispensing

15.3■ Healthcare(excluding sales of our
subsidiary Japan)■ Household ware

18.8%

■ Food17.1%■ Others

0.1%

20.6%

■ Beauty items

A 調剤

Customers

G デジタル会員数

21.4%

Percentage ofsales by category of
the SUGI Pharmacy
operations

Up% fromthe previous year

イラストレーション

B 店舗● No. ofannual visitors

Approx.

billion yen

270

A 調剤

D 従業員

E 来店客数

million Approx.

B 店舗

0000 00000
00000 0Prescription Dispensing● No. of SUGI Pharmacy
card members

C お客様

F スギ薬局カード会員数

16

C お客様

0000 00000
00000 0

million● No. ofdigital members

Approx.

4.4

million* Total no. of downloads of SUGI Pharmacy app, SUGIsapo
app, and SUGI Pharmacy prescription notebook app.

Employees
0000 00000
00000 0● Sales● No. of prescriptions filled by us

105.2

A 調剤

B 店舗

15.6

Up
% fromthe previous year
C お客様

billion yen

9.83
1,100
1,000

■ No. of prescriptions filled by us(left axis)

Approx.

45,000
E 来店客数

millionG デジタル会員数

F スギ薬局カード会員数

Y-t-y comparison of prescriptions filled in
the entire market (right axis)

Annual double-digit growth achieved
continuously since our establishment

800

400

110

200

105

0
2011

2012

2013

2014

2015

2016

2017

2018

100
2019 (FY)* Data source: Trend Survey for Medical and Prescription Dispensing Costs by the Ministryof Health, Labour and Welfare

10

Sugi Holdings Report 2020
G デジタル会員数

F スギ薬局カード会員数

Pharmacists:* No. of full-time employees

Beauty advisers:

120

115

2010

E 来店客数

125

600

2009

6,182

D 従業員

(%)

Y-t-y comparison of the no. ofprescriptions filled by us (right axis)

0000 00000
00000 0

D 従業員

13.1

● No. of experts* Including partner employeesUp% fromthe previous year

(10 thousand prescriptions)

1,200● No. of medical institutions whose ­prescriptions are filled
by us (annual total)● No. of employees

G デジタル会員数

Women

Genderratio

Nationally certified
dieticians:

Men

45.9% 54.1%

Nurses:● Employment rate of persons
with disabilities

2,800 2.47％
1,139
425
87

Sugi Holdings Report 202011

Value Creation Process

Closer and More Reliable to Local Residents
So That They Can Seek Advice More Readily
We have presented value to society based on our corporate watchwords and our strategies for embodying them. We will continue tounderpin local residents’ rich lifestyles and healthy living and accommodate community healthcare needs, thereby contributing to society’s
sustainable development.

Mid-Term
Management Plan

Sustainable
Management

P16

P18

External environment

SUGI Pharmacy Group’s Business ModelSound financial
foundation

Operations

Advantages

Prescription
dispensing

Humanresources
embodying
the concept“kindness”

Employees

Drugstore
operation

Aging population and lower birthrate

Increase in medical costs

Innovation of digital technology

Diversification of values

Preventive
care

Home
­healthcare

Total Healthcare Strategy
P26

Network of Customer baseof approx.
approx.
16 million
1,300 stores­customers

P14

Maximize Customers’ Lifetime Value based on
Lifetime Contact Points with Customers
Medical care andmedication

Self-care

Elderly nursing supportand daily life support

Realizea societywhere
everyoneeveryonesmiles andis happy

Foundation underpinning the management of
the corporate group

Store network

Management
philosophy
VisionSUGI Pharmacy
card members

P2

Our pledge

Reinforcement ofCorporate
GovernanceThorough ComplianceManagement andRisk Management

P30

P34

Expertise of theprescription­dispensing­drugstore model

12

Sugi Holdings Report 2020

Sugi Holdings Report 202013

Value Creation Process
Efforts Made under the Total Healthcare Strategy Total Healthcare Strategy
At the SUGI Pharmacy Group, we are striving to develop a business model to underpin every health stage of our customers by proceeding with a

SUGIsapo Walk

SUGIsapo Deli

wide variety of operations in the healthcare field based on the sales of drugstore items.

Elderly nursing supportand daily life support category

Medical care andMedication category

Self-care category

Releasedin March
2019

Fitness

Diagnosis
Health checkup

Health counselingand measurement

SUGIsapo Walk/SUGIsapo Eats

Prescription dispensing

Health checkup

Elderly
nursing care

Primary
prevention

Personal
health record(Healthy lifestyles)(PHR)

SUGIsapo Deli

B-to-C service

Releasedin August
2019

Lifestyle-related Disease
Risk ReportB-to-B/B-to-C service

Analysis of each individual’s health checkup results with reference to the healthcheckup data of 1.5 million people
Report service to encourage preventive behaviors against lifestyle-related diseases

Meal delivery service under the supervision of nationally certified dieticiansLong-term elderly
nursing care

Chronic-phasemanagement

Secondary
prevention

B-to-C service

Self-care support service designed to assist users to improve their daily lives in suchaspects as walking and eating

Online counseling, medical
treatment, and medication
instruction

Treatment

Releasedin November
2018

Terminal care

Terminalstage

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

Launched
in August2019

Healthcare network connecting approximately 1,300 physical stores and local communities
In the Total Healthcare Strategy, people’s lives from their birth until the end are divided roughly into the three stages covered by the self-carecategory, the medical care and medication category, and the elderly nursing support and daily life support category. The strategy is intended
to ensure contacts points with customers, regardless of their health condition, and provide optimum products and services appropriate forSpecific Health Guidance

B-to-C service

Health guidance service provided by nationally certified dieticians at stores toencourage preventive and improvement behaviors against metabolic syndrome

Launched
in July
2018

Choi-soko

B-to-C service

Joint program in collaboration with a local government and Aisin Seiki Co., Ltd.
Mobility support service mainly for senior citizens to travel to and from local
facilities

the condition of customers in different stages by integrating our physical advantages with digital technology. To push forward with thestrategy, we emphasize close ties and trust between local governments, companies and their health insurance associations, and medical andelderly nursing-care workers. By expanding our network even outside our corporate group, we are striving to become an operator of drugstores

Corporate Alliances to Proceed with the Total Healthcare Strategy as an indispensable entity for local communities.
Fitness club

Strategic Dominance of Setting Up
New Branches around Key Stores

Hospital

Research institute(university)

Pharmacy

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

Key store
Home-care
supportclinicHealthinsurance
association
Healthcheckupinstitution

Local government(Municipality and comprehensive
community support center)14

Sugi Holdings Report 2020

Elderly nursing
service provider* 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 takehealth measurements, while providing health counseling, health instruction andprescription dispensing services. They also feature a medical institution, lease andsell welfare products, and provide home healthcare. In addition, they also have acommunity space where events by nationally certified dieticians and pharmacists
hold events on a regular basis.

Capital andbusiness allianceconcluded in
March 2018

MedPeer GroupOperation of an online doctor community site in which 120,000 doctors are registered, and development of an online medical business and preventive care businessthrough the use of IT

Capital andbusiness allianceconcluded in
March 2018

M-aid
Development of a health management support service for companies through a
combination of an integrated management system of health checkup data, apps,
and health measurement devices

Sugi Holdings Report 202015

Mid-Term Management Plan 2022
— Toward Enhancing Our Corporate Value by Maximizing Customers’ Lifetime Value —We have been pushing forward with our growth strategies, such the Total Healthcare Strategy, to expand our management foundation,
including logistics centers, under the slogans of “Consolidation of our foundation and framework for growth” since FY 2015 and “Aggressive
management approach” since FY 2018. Today, as these efforts are producing the desired results, we will accelerate the speed of our reforms
to further enhance our corporate value, by reviewing the Mid-Term Management Plan 2020 a year ahead of the original schedule and proceeding with our operations based on a new three-year mid-term management plan from FY 2020.

■ Overview of the Mid-Term Management Plan
FY2015–FY2017

FY2018–FY2019

F2020–FY2022

Consolidation of our foundation andframework for growth

Aggressive management
approachEnhancement of our corporate value by­maximizing customers’ lifetime value

Growthstrategy1

Reinforcement of our sales power2

Reinforcement of management with thefocus on customers’ LTV
LTV: Lifetime value

3
4

Reinforcementof themanagementfoundation

5
6

Expansion of cooperation and collaboration
Promotion of DX in management
DX: Digital transformation

Improvement of productivity
Reinforcement of human resources andorganizations

FY2022 Quantitative target

Strategy for Dispensing Prescriptions
Establishing a prescription dispensing and medical care network by adopting three types of community healthcare stores
We will proceed with a combination of the three types of community healthcare stores: “pharmacies with the function of prescription dispensing,” or the prescription
dispensing drugstores that we have developed so far; “pharmacies featuring medical malls or clinics” to provide one-stop medical services from the viewpoint of thecommunity medical infrastructure required in the age of the super-aging society; and “on-the-premises” pharmacies, designed to support increasingly sophisticatedmedical care. While achieving cooperation with local medical institutions, we will ensure that patient information is shared regardless of the type of pharmacies thatthe patients use, and establish a network of prescription dispensing and medical care to underpin local residents’ safe and secure daily lives.

“Pharmacies with thefunction of prescription
dispensing”
Expanding the standard model asan advantage that we havemaintained since ourestablishment• Reinforcing our operations in existing areas (opening stores, frequently-visited stores &experience-oriented stores, dispensing prescriptions)• Expanding into new growth areas (inbound tourists and overseas markets)• Proceeding with the Total Healthcare Strategy• Enhancing customers’ LTV by integrating our physical and digital assets

A medical mall or clinic located on a store’s
second floor or in a parking area

• Concluding alliances and M&A transactions (within or outside the industry)“Pharmacies featuring
medical malls or clinics”• Optimizing the entire value chain process through information sharing• Presenting new forms of customer experience through the use of digital technology

Reinforcing cooperation with medical
institutions from the perspective of local
medical infrastructure• Optimizing our existing operations through the use of digital technology• Opening new stores with high investment efficiency and renovating existing stores• Enhancing operational productivity (abolishing unnecessary tasks, employing part-time＋

key players who will underpin the next generation• Making our organizations more streamlined and less hierarchical toward increasing our• Net Sales ¥710.0 billion, Operating profit ¥37.0 billion (Profit rate 5.2%)

Maximization of Customers’ Lifetime Value
We believe that the key lies in the concept of customers’ lifetime value based on a lifetime relationship established between us and each customer by strengthening
the contact points with them. From now on, we intend to provide a wide variety of products and services well-tuned to the needs of each customer in a timely mannerboth at physical stores and online, thereby striving to increase customer satisfaction and maximize our customers’ lifetime value.

Physical store

Super-aging society
Increases in the numbers of single-person households
and women with careers

Evolution to an operator of next-generation stores where one-stop
services regarding medical care, welfare, and daily lives are available
Strengthening the functions of community
healthcare and welfare infrastructure

Hokuriku:＋

Creating customer experience through customer communication enhanced by integration of our physical and digital assets

We intend to push forward with strategic dominance in the three large metropolitan areas in Japan of Kanto, Chubu, and Kansai, while accelerating our efforts toopen stores in Hokuriku as a new growth area. Our plan is to establish 120 new stores in FY 2020, and then more than 100 stores per year.
Viewing a wide variety of future changes in the social environment as excellent opportunities for us, we will open competitive, next-generation stores that will beeven closer to and more reliable for local residents.

430

Alliance in the field of
medical care

OnlineSocial media
and video

Experience

Counseling

Onlineapp

Store
Medication

Home-visit nursing
Rental and sales of welfare products

Lifestyle-relateddisease risk report

Healthcheckup

Shopping

BeautyHealthPrescription dispensing
drugstore

Chubu:
Kansai:

16

Sugi Holdings Report 2020

530

560

Health-oriented product
Smile care foods

EC
Shopping support
Expansion of our lineup of services

SUGI
Pharmacy app· SUGIsapo Deli· Omotenashi service

EC

Prescription
Dispensing

Consolidating digital membership as the cornerstone for providing customer experience

Health community function+· SUGI Pharmacy prescription
notebook app

Integrated­customer
database

SUGI
Pharmacy card

· SUGIsapo Walk app· SUGIsapo Eats app

Medication
management
and support

Alliance in the field of elderly
nursing and patient nursing

Featuring a clinic
Featuring a medical mall

Delivery

Health­management
and online
counseling

Physical and digitalcommunication

instructionCounseling and support for elderly nursing

80

Reinforcing support for sophisticatedmedical care as an import base connecting
central hospitals and local stores(FY 2019 result: Nagoya University Hospital Store)

Home healthcare

Onlineproductivity and expanding into new business fields

Holding a dominant share by opening stores on an aggressive note, and making our stores even more competitive

Kanto:“On-the-premises” pharmacies

workers, and proceeding with automation)• Employing and training human resources to make our stores even more robust and fostering

Strategy for Opening New Stores

FY 2022 Target Number of Stores to Be Opened in Each Area

Mutual sharingof patient
information

Microwave
meals

Meals for single
dwellers

Expansion of our lineup
of food products

Additional function as an element of thecommunity life infrastructure

An important index for customers’ lifetime value is the number of app
members.
We will ensure that SUGI Pharmacy
apps serve not only as tools for sales
promotion and dissemination of information, but also as the “gateway” toour digital contact points, thereby
enabling us to provide even better services, including via the health support
app SUGIsapo Walk.

10 million members(Target for the end of FY 2022)

3.5

millionmembers

Synergy(Result as of the end of FY 2019)5 million users(Target for the end of FY 2022)

0.6 million users(Result as of the end of 2019)

SUGIsapo Walk has an entertainment aspect, enabling all generations, from young people tosenior citizens, to enjoy walking,and it is expected to attract many
more visitors to our stores.

Sugi Holdings Report 202017

Sustainability & Priority Issues

Proceeding with Sustainable Management<Sustainability Basic Policy>

As a corporate group that focuses on local residents’ daily lives, we believe that it is important to adapt to social changes, and live up to the demands
and expectations of stakeholders. To do so, if we solve social problems and contribute to the formation of a sustainable society, and thereby realize
our corporate group’s management philosophy, we can achieve sustainable corporate growth. With this background, we have established theSustainability Basic Policy, which is designed to focus on four issues regarding sustainable corporate activities and proceed with various efforts.

The SUGI Pharmacy Group aims to contribute to the sustainable development of local communities through cooperation withstakeholders, 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.

<Relationship between Our Priority Issues and the SDGs>
Priority issues regarding sustainable corporate activities

Major efforts

Creation of products and services that
support perpetual healthy living
Each customer’s happiness

P20–21Development as a regional base that
supports the safety and security of all people
Everyone’s happiness

P22–25

employees can work comfortably and play active roles● Reduction of waste products and returned goods by­realizing efficient product procurement and efficient­delivery methods in cooperation with business partners● Development and sales of environmentally-friendly products● Promotion of the use of reusable bags

resources by eliminating overdo, waste and unevenness

18

Sugi Holdings Report 2020

● Development of stores as the cornerstone of local­residents’ daily lives and local communities● Development of stores that cater to local needs in thefields of medical care and welfare services● Expansion of our service lineup and infrastructure in theage of the super-aging society● Contributing to the enhancement of community safety
and security

P26–28

Efficient and environmentally friendly use of products andEveryone’s happiness● Development and provision of services to enhancepeople’s health and welfare through integration of­physical and digital assets● Development and provision of value-added products to­contribute to users’ good health and high-quality lives● Increase in customer satisfaction through the use ofdigital technology● Realization of diversity in working styles● Support for each employee to fully demonstrate his/hercapabilities● Employment support for senior citizens and the disabled● Enhancement of employees’ good health

Provision of a workplace environment where

Each employee’s happiness

Related SDGs

P29

Sugi Holdings Report 202019

Sustainability & Priority Issues 1

Creation of Products and Services That Support
Perpetual Healthy Living
Development and provision of services to enhance people’s health andwelfare through integration of physical and digital assets

Development and provision of value-added products to contribute tousers’ good health and high-quality lives

Providing support for each individual’s health through SUGIsapo apps designed to encourage users
to walk more frequently and assist them with healthy dietary habits

Providing innovative products developed with unprecedented technology through industry-academia
cooperation, and supporting users’ daily lives

SUGIsapo apps, intended to support users’ exercise, diet and self-care, are used not only by customers living in our operating areas, but also by many otherWe will reinforce and revamp the product lineup of our private brand (PB), which consists of the categories of Royal, Middle, and Basic, with a particularsmartphone users. We are striving to establish relationships with customers in order to encourage them to be more aware of their health and change theirfocus on the development of high-quality and value-added products.

behaviors so that they can maintain their good health.

Prieclat, the result of cutting-edge technology jointly developed with Kyushu University

SUGIsapo Walk

SUGIsapo Deli

This is an incentive-type pedometer app thatallows users to earn SUGIsapo Miles, which canbe exchanged with SUGIsapo Points to be used at
our stores. The daily active user (DAU) rate among
those in their 60s and over is 55%, enabling theapp to rank first among a number of pedometerapps. The average number of daily steps by users
exceeds the targets set under Health Japan 21(second term) for those aged 65 andover (men: 7,000 steps; women: 6,000
steps), showing that the app contributes
to enhancing senior citizens’ good
health.

Supervised by nationally certified dieticians, the menu items of thisapp are popular not only among those who are on a restricted diet,but also those seeking to have an even healthier diet. Featuring a
product lineup according tothemes, all items are highly
acclaimed in terms of price,
quantity, and taste, leading
to repeat purchases. A healthcounseling service is alsoavailable, further enhancing
users’ reliance on the app.

Targets set under Health Japan 21 (second term)

SUGIsapo Walk user

7,304

Vitamin C
derivative*2

8,290
7,644

Women

FY 2019 results

6,705
5,000

6,000

7,000

8,000

9,000

10,000Source: National Health and Nutrition Survey, 2018

No. of sets sold:

SNDP® technology

70,007

No. of users:

8,536

The SNDP® technology for special lipophilic layer nanocoating with inner/outerdouble structure can deliver water-soluble/polymer components even to thecorner of the stratum corneum by nano-dispersing oil/water-soluble material.

Providing facility-visit health checkup services and specific health guidance to ensure thatmany more dependents have health checkups at stores in their local communities
To increase the current low rate of dependents getting healthcheckups, we provide opportunities for them to have healthcheckups more easily at the stores where they usually go, andalso receive specific health guidance from nationally certified
dieticians. By doing so, we would like to contribute toincreasing the health checkup rate to help dependents stayhealthy and reduce their insurance premiums.
20

Sugi Holdings Report 2020

Water-soluble
proteoglycan* Conceptual illustration

4,759

National average Men

4,000

Hydrolysis
hyaluronic acid

5,417

SUGIsapo Walk user
Aged 20 to 64

SNDP® technology involves coating four types of moisturizing
components for beautiful skinVitamin E
derivative*3

Average number of steps per person

National average Men
Aged 65 and over Women

Based on percutaneous penetration technology researched by Kyushu University, with the aim of eliminating injections fromthe world, we have jointly developed the patent technology SNDP® to enable effective components of cosmetics to be delivered
deep to the inside of the stratum corneum. This technology is recommended by Kyushu University as an excellent result of the
Nano-technology Platform Japan Program of the Ministry of Education, Culture, Sports, Science and Technology.

We will enhance the lineup of the Prieclat series through a step-by-step

No. of facility-visit health11
checkups
No. of those who received
689
facility-visit health checkups (Health checkup and cancer screening)
No. of those who received
1,224
specific health guidance*2: Phosphoric acid ascorbyl Mg   *3: Acetic tocopherol

Popular products in the Royal category

FY 2019 activities
Japan Health
Insurance Association

Four types of moisturizing components penetrate into
the stratum corneum
Featuring cutting-edge technology for enhancing the penetration of effective components, Prieclat contains four typesof safe and biocompatible components as moisturizers forbeautiful skin.

National Health
Insurance Society
4launch of a spot removal cream and a drink for beautiful skin.

Rakuraku 331
Containing yeast 331, thisseries helps users to walksmoothly in their daily lives.

194(Cancer screening)

Sugi Holdings Report 202021

Sustainability & Priority Issues 2
We have an area system in which each area is covered by 10 local stores to provide even better services

Development as a Regional Base That Supports
the Safety and Security of All People

with greater focus on their communities, by considering how to enhance customer satisfaction. The key store
in each area plays the pivotal role, in cooperation with administrative agencies, in organizing walking eventsand promoting other efforts to enhance residents’ good health and beauty.

Development of stores as the cornerstone of local residents’ daily lives
and local communities
Shifting our focus from “merchandise” to “experience”
and transforming ourselves into a local health station
for sharing critical moments with local residents
We are establishing many more stores featuring a community spacewith health measurement equipment. While ensuring that the customer
experience of making health measurements at our stores leads to thedevelopment of the habit of having a health checkup every time they
visit the store, we would like to provide opportunities for local residents
to gather and converse with one another by holding health counselingsessions. We are thus proceeding with the creation of a foundation for
local residents’ good health and daily lives.

Contribution to the enhancement of community safety and security
Concluding comprehensive partnership agreements with local governments as the starting point of community communication
We are reinforcing sustainable efforts toward solving community problems through mutual
cooperation based on comprehensive partnerships between local governments and SUGI
Pharmacy. Our particular focus is on community development to promote the wellness of local
residents by using the assets of our stores and experts. We organize a wide variety of events
that are accessible to local residents and enable participants to enhance their good health.

No. of participants

No. of counselingsessions held

56,8933,230

FY 2019

Organizing a health festa as an opportunity for interaction
among local residents

Expansion of our service lineup and infrastructurein the age of the super-aging society
Providing home-visit prescription dispensing services and home-visit nursing
services as a framework underpinning a comprehensive community care system
To help local residents maintain their own lifestyles in familiar surroundings, we provide
highly-acclaimed, high-quality support services, ranging from daily conversations with patients
to high-level medication management, through cooperation involving a wide variety of medical
experts, such as doctors, pharmacists, and nurses. With an increase in the number of users of
our home-visit prescription dispensing services and home-visit nursing services, we will continue
to focus on these services to contribute to community healthcare.

Comprehensive partnership agreements with 13 municipalities; non-health-insurance-covered service agreements with 2 municipalities; disaster damage reduction agreements with 27 municipalities and 2 organizations;and watching-over agreements with 9 municipalities (as of the end of February 2020)
No. of events held in FY 2019: 239

No. of service
storesMonthly no. of users

10,740Home-visit
prescription
dispensing

487(Annual total no. ofusers: 128,880)

Home-visit
nursing

11(Annual total no. ofusers: 11,532)

961

We organize a wide variety of events in various parts of Japan, ranging frommeasurements of body composition and bone density to health counseling,
parenting counseling, skin checking, make-up experience and pharmacist
career experience, as fun
opportunities to consider
health. We ensure thatthese events enhance
participants’ awarenessof their health andenable us to earn many
more customers.

(As of the end of February 2020)

Providing the Omotenashi service, a life-support delivery service to help
senior citizens and sick people who find it difficult to go shopping
We have launched this delivery service in response to the demand from patients receiving
medical treatment at home or nursing facilities and from their families wishing to receive not
only medication but also daily-life products. By handling a wide variety of daily essentials fromsanitary supplies and products to food, we will continue to contribute to an even better
quality of life of those who cannot visit our stores.

Addressing the inconvenience of local transportation
through Choi-soko, a mobility support service
Choi-soko is a joint project with Aisin Seiki Co., Ltd. to provide a sharedpick-up and drop-off service as a form of daily support for citizens who find
it difficult to go to shopping facilities and medical institutions. Simply bymaking a reservation on the phone, the service users are transferred to registered facilities, such as administrative agencies, medical institutions andsome of our facilities, at the desired time. This easy-to-use service leads seniorcitizens to go out more frequently, which contributes to their good health.

Choi-soko was selected as one of the Good
Design Best 100 and also given a special award
In the FY 2019 Good Design Awards by
the Japan Institute of Design Promotion,
we were granted the Good Focus Award(New Business Design). The award is
granted to entities in recognition of theircreation of a new business model or new
industry, or in recognition of an excellent
design expected to contribute to the promotion of innovation.

22

Sugi Holdings Report 2020

Organizing food education events

Supporting walking events for citizens
We support walking events organized by a local government and a railway company. While discovering
new attractions within their communities while walking, participants in the events are expected to drop in
on our stores registered as check points, where they
can receive product samples and take health measurements. By providing these opportunities, wewould like to contribute to the good health of local
residents while also making promotional efforts.

We organize sandwich cooking workshops for children and their parents,
with nationally certified dieticians serving as instructors. We also propose
recipes that are good for lowering vascular ages. By doing so, we strive
to support the good health of all family members from children to seniorcitizens. In addition, we hold food education events not only at our stores
but also at Michi-no-eki (roadside rest areas), extending the scale of theeducational program in order to accommodate local needs.

Cooperating with Obu City in its health program
Organized by Obu City, Aichi Prefecture, using Karada Karte® of Tanita Health Link Inc., to increase citizens’ interest in their health, thisprogram is joined by approximately 800 participants with activity trackers. Our stores located in the city have installed reader-writer devices
to send data from the activity trackers. The participants visit the stores to upload their tracker data, and receive advice on exercise and dietfrom nationally certified dieticians there. By ensuring this process, the program intends to improve the retention rate and increase theamount of physical activity by participants.
Sugi Holdings Report 202023

Sustainability & Priority Issues 2

Development as a Regional Base That Supports
the Safety and Security of All People
Contribution to the enhancement of community safety and security
Donating and installing AEDs to save many more people

Promoting sports■ Donating AEDs to facilities for senior citizens
In light of the lower installation rate of AEDs among facilities for senior citizens, we began to donate AEDs
to facilities for senior citizens in FY 2013. In FY 2019, we donated AEDs to 20 facilities for senior citizens
in the cities of Nisshin and Nagakute, Aichi Prefecture, making the total number of facilities to which wehave donated AEDs so far to 147 in 13 cities. After donating an AED, we always visit the facilities andhold training sessions so that staff there can learn about how to use the equipment correctly.

We have a partnership contract with the local soccer club FC Kariya, sothat both of us can attract many more supporters by organizing soccer
training sessions for children and competitions and conducting healthcheckups for spectators. In addition, we provide employment support
so that the team’s players can work at our stores, enabling them toplay an active role not only on the soccer field but also at our stores.

Annual number of AED donations

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

FY 2018

FY 201920 units

22 units

20 units

27 units

17 units

21 units

20 units■ Installing AEDs at many more of our stores
Although we have installed AEDs mainly at key stores in response to requests from the local community,
we are presently proceeding with installation of the equipment at stores located in communities withmany senior residents, stores visited by many customers, and stores situated in communities with which
we have concluded comprehensive agreements. By doing so, we are striving to reinforce our function asa health station where medical care is available.

Providing support for children with intractable diseases and their families
In FY 2014, we began to invite children with intractable diseases and all theirfamily members to an amusement theme park. Inviting 16 families annually,
employees from our corporate group accompany them every time to help themenjoy the experience. Up to FY 2019, we have invited a total of 100 families, withthe total number of employees joining this program reaching 556.

Promoting the Dementia Friend initiative to understand dementia correctly
We ensure that all stores of our corporate group have Dementia Friends to provide appropriate
services based on their accurate knowledge and understanding of dementia. Such staff members have participated in a training program for Dementia Friends, enabling those with dementia
and their families to visit the stores without worry.
No. of Dementia Friends: 9,469 (as of February 2020)

Donating first-aid kits to local children
We donate our original-design first-aid kits, consisting of adhesive and non-adhesive bandages, gauze, clinical thermometers, and other items, mainly to the
local governments with which we have concluded comprehensive agreements.
We have so far donated a total of 880 sets to 10 cities, which distribute them tonursery schools, kindergartens, children’s sports clubs and other facilities andgroups for children.

Donating life-support materials to the Okazaki Medical Center of Fujita Health University
We donated life-support materials to the Okazaki Medical Center of Fujita Health University, which accepted those who had tested positive
for COVID-19 but displayed no symptoms and those who had had close contact with them. We provided approximately 100 kinds of items,
including sanitary goods, such as disinfectant spray and disinfectant wipes, and beverages and paper products. We did so to support thosestaying at the center for follow-up observation and medical experts involved in infection control.

24

Sugi Holdings Report 2020

Promoting the Pink Ribbon Campaign
We display posters with the message “For Your Safety and for Your Family’s Safety”
to encourage breast cancer patients to stay positive and not to be anxious or worry
about the disease all by themselves. We also distribute breast cancer inspection
handbooks through our stores to encourage self-inspection for the purpose of early
detection. In addition, to contribute to enhancing the quality of life of patientsworrying about the loss of their hair as a side effect of chemotherapy, since FY
2013, we have annually donated medical wigs to 100 breast cancer patients. Up
to FY 2019, we have donated medical wigs to approximately 700 patients.

Offering cosmetic therapy to provide comfort and relaxation
Beauty advisers from our corporate group provide those staying at hospitals or nursing
facilities for a long time with make-up services to ensure “emotional communication”
with them through skin contact and conversation. This cosmetic therapy makes not only
the therapy receivers but also their families and other people taking care of them feelcheerful and positive. From the launch in FY 2009 to FY 2019, we have offered thetherapy to a total of 3,404 people at 201 facilities.

Sugi Holdings Report 202025

Sustainability & Priority Issues 3

Even in the age of digital innovation, we are confident that our excellent human resource development systems will
enable us to remain competitive. As indicated by our management philosophy, which highlights the “happiness ofProvision of a Workplace Environment Where Employees
Can Work Comfortably and Play Active Roles

each employee,” we have a long-established corporate culture in which our priority on employees is anchored. To
make this perpetual, we provide each employee with an environment and opportunities so that he/she can fully
demonstrate his/her capabilities, while supporting diversity in working styles that suit each individuals’ life stages.

Realization of diversity in working styles

Employment support for senior citizens and the disabled

We are reinforcing our support for our human resources to continue their careers by, for example,
introducing a local employment system, a working-hour option system and a teleworking system,
and by providing information for employees on leaves of absence. These efforts enable our employees to work depending on their life stages, such as parenting and elderly nursing, without restrictions regarding time and place. In addition, we have many foreign employees, creating a working
environment where both Japanese and foreigners can fully demonstrate their capabilities together.
For experts, such as pharmacists, beauty advisers and nationally certified dieticians, we provide anenvironment where female staff members can work for a long period of time even after having a baby,
leading to a high ratio of women at our stores. Moreover, we encourage our employees to take leaveand reduce their working hours so that they can take care of their elderly parents. We are improving
in-house systems so that our employees can take care of their own lives and families with pride.

No. of male employees:  3,342
No. of female employees: 2,840

No. of full-time
employees

6,182

Men

Women

54.1%

45.9%

■ Post-retirement re-employment system

お客 様 よ り ・ ・ ・ ᴾ
先日毛受店店頭で湿疹用の軟膏を購入しました。
その際にレジの方と薬剤師の方にとても丁寧に対応していただきました。
また薬剤師の方にお勧めしてもらいました軟膏で、
当方の無知故にお時間を取らせてしまいましたが、説明も丁寧で症状に対して適切なものを勧めてもらえました。
ありがとうございます。
昨今何かとお忙しい状況ではありますが、その中でお時間を割いての

接客ありがとうございました。

We are strengthening our efforts to foster a wide range of human resources, suchas those working at our stores, those demonstrating their capabilities outside ourcorporate group, and those expected to serve in management in the future. We
develop promising human resources by the establishment of a training system for
fostering store managers and experts with high-level communication skills, introduction of a self-application system, rotating task assignments cross-sectionally,
providing opportunities for training at outside organizations, and sending
employees to partner companies to foster human resources who will underpin
business development in new fields expected to grow in the future.

With consideration given to the aging society withlower birthrates, we have introduced an HR system thatenables employees to select their own working styledepending on their life stage, such as parenting andelderly nursing, without restrictions on time and place.
By establishing our own original standards, which
exceed the statutory standards, we provide support forour employees to strike the best balance without worry
between their careers and parenting/elderly nursing.
26

Sugi Holdings Report 2020

Our post-retirement re-employment system allows employees to work until the age of 65. Thosewith certificates as, for example, pharmacists, and with experience as managers, foster the
younger generation by using their skills and capabilities cultivated through their long-term
careers. Meanwhile, those with the experience of working at stores continue to serve customers
with kindness and sincerity.

湿疹が改善しとても状況が良くなりました。

Reinforcing HR development and facilitating the progress of
employees through our career system

Providing support for employees according
to their life stages

Providing optional, flexible workstyles

As of the end of February 2020

Commending employees based on evaluations from both inside andoutside the corporate group
We hold an award ceremony at the end of every year to commend excellent employees inrecognition of their achievement of favorable results through fulfillment of the management
philosophy. The awards are divided into Individual Awards (for managers and for non-managers)
and Group Awards. In addition to the award ceremony, if a store receives comments of appreciation from customers on a daily basis and is highly praised by them, the store’s employees arealso commended. In FY 2019, we granted the awards to more than 1,000 employees, including
100 winners of Individual Awards and staff members of 51 stores receiving Group Awards.

To contribute to further expansion of the employment of senior citizens, we ensure that flexible working styles are available so that
senior citizens can play an active role in society.
We also provide an environment and opportunities for the disabled to become independent by setting a wage for each disabledworker depending on his/her capabilities and assigning him/her appropriate tasks. By expanding the area where the disabled are
employed as store staff from Chubu to Kanto, Kansai and Hokuriku, we will establish a corporate culture where staff can work
together whether they have disabilities or not.

■ Silver Associates System (Senior Iki-iki Club)
Under this system, we conclude business contracts with those aged 65 and over sothat they can work at their own pace in the time slots they select, meaning that they
can decide their working days and hours as they like. We launched this unprecedented system in FY 2017. By providing contact points between society and seniorcitizens with spare time to work, we would like to contribute to enhancing their
physical and mental health and extending their healthy lifespans.

No. of those registered (FY 2019)

985

Average age of those registered

70 (Maximum age: 84)

SUGI Smile’s efforts
Nine in-house job coaches and 28 career counselors provide 316 employees with disabilities with operational guidance and daily support. At our headquarters, these employees sort mail, do cleaning, and ship
products to support logistics, while at stores, they do cleaning and arrange products onto shelves.

FY 2017

FY 2018

FY 2019

No. of disabled

261

288

316

Percentage of disabled of all employees

2.36%

2.41%

2.47%

Our parenting-support systems exceeding the statutory standards
SystemSpecial leave for spousal childbirthParenting timeWorking-hour reduction forparenting
Leave for child nursing
Fixed working conditions forparenting
Carry-over of annual leave

Description
Two-day special leave (No statutory standards)
Until the child turns three years old (Statutory standard: less than
one year old)
Until the child completes his/her elementary school program(Statutory standard: less than three years old)
Seven days. For two or more children, 14 days of leave is available. (Statutory standard: five days and 10 days, respectively)
Until the child begins junior high school (Statutory standard: until
the child begins elementary school)
Working hours are fixed; days-off are fixed on Saturdays,
Sundays and national holidays; it is also ensured that one-way
commuting time is less than 60 minutes (No statutory standards)
Annual leave, which is available only within a designated period,
can be carried over. (No statutory standards)

Certified as a Platinum Kurumin company
英ロゴ未We are the first in the drugstore industry to be certified as a Platinum Kurumin business operator. The certification is
granted to general employers that conform to the designated standards regarding parenting support. The percentage
of our female workers who continue to work for a year or longer after taking parenting leave has reached 96%, muchhigher than the 90% required for Platinum Kurumin certification. In FY 2019, 455 employees (women: 444; and men:11) took parenting leave, with the percentage of those returning to work after their leave reaching 94%.

Sugi Holdings Report 202027

Sustainability & Priority Issues 3

Sustainability & Priority Issues 4

Provision of a Workplace Environment Where Employees
Can Work Comfortably and Play Active Roles

Efficient and Environmentally Friendly Use of Products
and Resources by Eliminating Overdo, Waste and Unevenness

Enhancement of employees’ health

A wide variety of efforts at our stores and headquarters

The first thing we need to do as a corporate group in proceeding with the Total
Healthcare Strategy is to enhance the health of our employees, who are the mostdirectly involved stakeholders. Accordingly, we are striving to achieve a smoking rateof 0%, a health checkup rate of 100%, a specific health guidance rate of 100%, anda breast and womb cancer screening rate of 100%.

We are taking environmental measures through the efforts of reduction,
reuse, and recycling (of waste) at our stores, headquarters and logistics
centers.

FY 2022 health enhancement targets
Toward achieving our FY 2022 health enhancement targets, wehave set FY 2020 targets for reducing the entire corporategroup’s smoking rate to 13% and increasing the specific healthguidance rate to 100%. Moreover, in light of our high ratio of
female employees, we are striving this year to increase thebreast cancer screening rate and the womb cancer screening
rate to 85% and 70%, respectively.

Efficient use of resources

FY 2017

FY 2018

FY 2019

FY 2020(target)FY 2022(target)Health checkup rate

92.7%

99.7%

98.6%

100%

100%

Breast cancer screening rate

77.5%

77.6%

78.9%

85.0%

100%

Womb cancer screening rat

57.6%

58.4%

60.0%

70.0%

100%

Specific health guidance rate

7.9%

88.4%

*

100%

100%

Smoking rate

17.9%

17.0%

14.9%

13.2%

0%

* Due to the spread of COVID-19, supervision that would have been provided in FY 2019 is scheduled to be given by around August 2020.

We have established environmental stations at all our logistic centers to collect unnecessary resources from our stores, sort them into the designatedcategories, and hand them over to recycling plants and operators. While promoting this recycling process, we also ensure that our stores collect medical
and pharmaceutical products whose expiry dates are imminent and use themto, for example, train pharmacists.

Treatment for recycling

Product shipment

RecycleResource collection

Environmental efforts at our stores and headquarters■ Reduction in power consumption

Health and productivity management declaration based on the management philosophy

At our stores, headquarters and offices, we strive to reduce power consumption mainly through careful temperature control, air-conditioner cleaning on

Our corporate group is responsible for maintaining and enhancing the health of our employees and all other citizens. By reinforcing ourhealth and productivity management system, we make a pledge to proceed with the creation of a sound workplace environment where
each employee tries to maintain and enhance his/her health on a voluntary basis.

few years, with our schedule for the replacement of conventional lighting with LEDs both inside and outside all our stores to be completed in FY 2020.

a regular basis, and changing lighting-up hours. In addition, we have been introducing LEDs for lighting both inside and outside our stores over the past
No. and weight of used checkout bags

■ Reuse of store equipment
We ensure that freezers and other appliances of closed stores are reused in new

Certified as a 2020 outstanding enterprise in terms of health and productivity managemen
Our corporate group was certified as a 2020 outstanding enterprise (in the large-enterprise division) in terms of health and productivity

No. of used bags (unit: 1 million bags)

FY 2018

FY 2019

270

262

2,400

2,000

stores and renovated stores and are kept for replacement of damaged items.
No. of used bags (unit: ton)management. We were selected as such jointly by the Ministry of Economy, Trade and Industry and Nippon Kenko Kaigi, in recognition of■ Reduction of plastic use

our strategic efforts concerning health and productivity management, based on the stance of viewing the enhancement of employees’ health

We are striving to reduce plastic use by replacing our existing plastic bags with bags made from thin but hard-to-tear materials and by changing bag

as a management issue.

sizes at appropriate timing. To prepare for the launch of the national system making the checkout bag fee mandatory from July 2020, we are now pushing
forward with a shift toward plastic bags containing biomass materials.

Efforts regarding mental health
In March 2007, we established the Mental Health Promotion Office for employees and launched various activities for the first time in the
drugstore industry. Today, we have also established Mental Health 110 as a counseling service to handle mental health problems in general,
thereby addressing various issues.

■ Creation of a paperless environment
At our corporate group, we are trying to go paperless in a wide variety of operations
to become even more environmentally-friendly and improve our operating efficiency.
Specifically, we are proceeding with digitization for placing orders with business
partners and requesting payment. In addition, we are also introducing online services■ Stress inspection

for membership registration and prize exchange, and also proceeding with digitiza-

For the prevention and early detection of mental health problems, we conduct an annual stress inspection. The inspection is available through eachtion for issuing payment slips to employees.

employee’s smartphone so that they can easily identify their stress level.

■ Mental Health 110
We have a system enabling employees to seek counseling from outside corporate counselors via e-mail or by phone so that they can receive counselingwithout worry at any time without any contact with the corporate group.

28

Sugi Holdings Report 2020

Sugi Holdings Report 202029

Corporate Governance
Board of Directors 
The board of directors, consisting of seven directors (including three outside

Chairperson of the board of directors

Representative Director& Chairman

No. of board members

7

Segregation of Duties and the Internal Rules on Administrative Authorities

No. of board members from outside3

regulations. The board of directors receives reports at appropriate timing, andNo. of outside directors appointed
as independent directors

3

directors), holds a regular meeting, in principle, on a monthly basis, and ad-hoc
meetings, if necessary, to make necessary decisions in a timely manner. The
execution of operations is in accordance with the Regulations concerning

also reviews these regulations, as needed.

Corporate Governance System 
Basic views on corporate governance

Name

Position

Appointment reason

Hirokazu Sugiura

Representative Director& Chairman

We have judged that his strong leadership, decision-making capability, track record in business management, and extensive
business k­ nowledge are indispensable for further development and expansion of our corporate group, and thus continued toappoint him.

Eiichi Sakakibara

Representative Director& President

We have judged that his profound insights and extensive experience in the drugstore industry and his leadership for improvementof ­sustainable corporate value will significantly contribute to further development and expansion of our corporate group, andthus continued to appoint him.

Katsunori Sugiura

Representative Director& Senior Vice President

He aggressively implements various measures to realize the Total Healthcare Strategy with the aim of expanding businessdomains in this age of the super-aging society. We have judged that he will significantly contribute to further development andexpansion of our corporate group, and thus continued to appoint him.

Shinya Sugiura

Director

As Managing Director of Sugi Pharmacy Co., Ltd., he supervises the sales division, proactively hires medical office workers andimproves training and education programs with the aim of increasing productivity in the prescription dispensing business. We
have judged that his extensive knowledge and experience will significantly contribute to future development of the medical carebusiness, the future core business of our ­corporate group, and thus appointed him.

Shigeyuki Kamino

Director(from outside)

He has made proactive remarks and recommendations during deliberations of the board of directors’ meetings. We have judgedthat his a­ ppropriate supervision and advice based on his profound insights and capabilities in terms of supervision of corporate
management will greatly contribute to the improvement of corporate value of our corporate group, and thus appointed him.

Yoshiko Hayama

Director(from outside)

She has abundant experience and professional knowledge developed by serving as a certified public accountant and external
director of listed companies. Due to her high levels of expertise in terms of business management and appropriate supervision
and advice from the viewpoint of an independent officer, we have continued to appoint her.

Michiko Hori

Director(from outside)

She is involved in the corporate management of another company that provides medical information, while serving as a director
at various institutions. We have judged that her profound medical insights, expertise and supervisory capability will significantly
contribute to the ­improvement of corporate value of our corporate group, and thus appointed her.

By putting our management philosophy into practice and contributing
to local communities extensively, we would like to establish good

Basic Policy

relationships with shareholders, customers, patients, business partners,(1) Respect the rights of shareholders while securing their equal
treatment;

local communities, employees and other stakeholders, and realize ourgrowth and development as a corporate group that can draw support
from them.
To do so, we believe that excellent corporate governance is an
essential part of our foundation. To ensure legal compliance, makeappropriate and prompt decisions, execute operations efficiently, and(2) Collaborate in an appropriate manner with stakeholders, taking
into consideration the interests of stakeholders, including shareholders, customers, patients, business partners, local communities
and employees;(3) Secure transparency by appropriately disclosing corporate information; and(4) Promote constructive dialogue with shareholders.

reinforce the auditing and supervision functions, we have a corporate
governance system and take the necessary measures based on thefollowing basic policy.

Corporate governance system

Corporate governance system

We are a corporate group with auditors. Our board of directors, con-Nomination andremuneration committee

necessary decisions in a timely manner. The execution of operations is
Appointment/
dismissal

board of directors receives reports at appropriate timing, and also

Board of directors

Proposal

Audit

Seven directors(incl. three members from outside)
Three auditors (from outside)

Our auditors attend the board of directors’ meetings and other

Direction

Reportappropriate corporate governance within the entire corporate group.

30

Sugi Holdings Report 2020

Cooperation
Direction

Direction

ReportRisk committee

Audit department

For the execution of management decisions and operations of ourselected as board members of the subsidiaries, in a bid to ensure

Cooperation

ReportRepresentative director

documents, including minutes of various meetings and documents for

subsidiaries, directors and senior managers of our corporate group are

Board of auditors
Three auditors(from outside)

ReportOperating department

Board of auditors

Established

No. of auditors

3

No. of outside auditors

3

No. of outside auditors appointed
as independent directors

3pare the audit plan, report the results, and exchange opinions and information. For theaudit of each department by the Audit Department, our auditors have meetings with the

Cooperationand information.
We have appointed Deloitte Touche Tohmatsu LLC as our independent accounting auditor.

Nomination and remuneration committee
Our nomination and remuneration committee consists of three members: two directors(including one outside director) and one auditor (from outside). For directors, decisions

Chairperson

Shigeyuki Kamino(outside director)

MemberHirokazu Sugiura(Representative Director & Chairman)
Kana Yasuda (outside auditor)

regarding their appointment and dismissal, the amounts of their remuneration, and the

Direction
Reportthe Audit Department hold meetings with the independent accounting auditor to pre-Audit Department to discuss the audit plan, report the results, and exchange opinions

Supervision

important meetings. They also conduct audits of the execution of

final approval, and report the results to the board of auditors.

ProposalAppointment/
dismissal

Independent accounting auditor

and the Internal Rules on Administrative Authorities regulations. The
reviews these regulations as needed.

Appointment/
dismissal

Two directors(incl. one member from outside)
One auditor (from outside)

Appointment/
dismissal

operations conducted by directors by means of inspecting important

For a periodic audit conducted by the independent accounting auditor, our auditors andGeneral shareholders’ meeting

sisting of seven directors (including three outside directors), makes allin accordance with the Regulations concerning Segregation of Duties

Board of auditors

Reportcalculation methods are made at board of directors’ meetings. Meanwhile, those for
auditors are made at board of auditors’ meetings. Both types of decisions are in linewith the deliberations of the nomination and remuneration committee.

Sugi Holdings Report 202031

Corporate Governance
Major Activities 

IR Activities 

Major activities by our outside directors in FY 2019

IR activity and information disclosure policy(from March 2019 to February 2020)

Name

Shigeyuki Kamino

Yoshiko Hayama

Hiroshi Matsumura

Toshihiko Sakamoto

Category

Description

Director

He made remarks regarding the execution of operations in general by taking advantage of his experience asa representative director of a company in the logistics industry and a director of an industrial society.

She made necessary remarks in a timely manner from a professional viewpoint in the field of accounting
based on her experience and insight mainly as a certified public accountant.

Director

Of the seven board of directors’ meetings held between the beginning of this fiscal year and November 11,
2019, when he passed away and was deemed to have resigned, he attended five meetings. He made necessary remarks in a timely manner based on his experience as a representative director of another company inthe field of medical care and nursing industry and from a professional perspective.

Director

Full-time auditor

He made remarks regarding the execution of operations in general based on his experience as a representative director of another company.

We believe that constructive dialogue with shareholders and investors
will lead us to increase our corporate value on a sustainable basis.

and investors, with the aim of enhancing the quality of ourStriving to gain trust and empathy, we will continue to improve ourcommunication.

efforts for highly fair and transparent information disclosure and dialogue, and thereby promote shareholders and investors’ understanding

Quiet periodof our management activities.

To prevent leakage of financial results information and ensuring the

Our management and administration departments are in charge offairness of information disclosure, we designate the period from thegeneral dialogue with shareholders and investors. Our representative

following day of the end of each fiscal year to the announcement datedirectors also attend face-to-face meetings, with consideration givenof the financial results as a “quiet period,” during which we refrain

to requests from shareholders and investors and their dialogue topics.

from presenting any comments on the financial results and answering
questions regarding them.

Means of information disclosure
For important information covered by the Timely Disclosure
Regulations, we make disclosures through the Timely Disclosure
Network (TDnet), operated by the Tokyo Stock Exchange. At the sametime, we also release the information through our website and other

Shigeo Asano

Kana Yasuda

He made remarks regarding the execution of operations in general based on his experience as a representative director and an auditor of other companies.

AuditorShe made necessary remarks in a timely manner from a professional perspective in the field of accounting
and taxation based on her insight by taking advantage of her experience mainly as a certified public accountant and a licensed tax accountant.

AuditorMoreover, we organize semiannual financial results briefingsand other meetings and answer daily inquiries from shareholders

means as promptly as possible. For information that is not covered by

Dialogue with shareholders and investors (FY 2019)
Financial results briefings for institutional investors andanalysts (first-half and full-year meetings)

2 briefings

Small meetings on our financial results for institutional
investors and analysts

14 meetings

Conference organized by a securities company

1 conference

Individual meetings for institutional investors(face-to-face/phone)

125 meetings

the regulations but is deemed useful for shareholders and investors
to deepen their understanding of our corporate group, we will try todisseminate it through our website and other means. To ensure fairness of information disclosure, we will release English versions oftimely-disclosure information and financial results briefing information to the extent possible.

No. of board of directors’ meetings (a total of 13 meetings) attended by ourdirectors and auditors
From March 2019 to February 2020

No. of board of auditors’ meetings(a total of 14 meetings) attended
by our auditors
From March 2019 to February 2020

Hirokazu
SugiuraEiichi
Katsunori
Sakakibara Sugiura

ShinyaSugiuraShigeyuki
KaminoYoshikoHayamaHiroshiToshihikoMatsumura* Sakamoto

ShigeoAsano

Kana
YasudaToshihiko
Sakamoto

ShigeoAsano

Kana
Yasuda13
meetings

13
meetings

13
meetings

13
meetings

13
meetings

5
meetings

13
meetings

13
meetings

14
meetings

14
meetings

14
meetings

13
meetings

13
meetings* Assumed the position in May 2019 (and passed away in November 2019)

BCP (in Case of Disasters and Other Emergencies) To prepare for contingencies that might gravely affect our corporate group, such as large-scale disasters and pandemics, we have prepared adisaster manual and established a business contingency plan (BCP). In addition, we conduct a disaster drill and biannual drills through oursafety confirmation system among all employees at the headquarters, offices, and stores.

FY 2019 Major Efforts
1

Identified risk factors of large-scale disasters based on the lessons learned through past disasters,
had our stores checked by authorized first-class architects, and conducted seismic reinforcement
as needed

2

Revised our store operation manual to prepare for earthquakes, storms, and flooding, distributed
the revised version to our stores, and conducted training programs and drills

3

Distributed the Compliance and Disaster Countermeasure Pocket Book to all our employees, to be
carried by them

4

Established a taskforce against COVID-19, took measures against the virus at our stores, head­quarters, and offices (by formulating regulations regarding cleaning, disinfection, ventilation, etc.),
and decided how to respond to possible infections in our corporate group

Although we are a corporate group with auditors, our corporate governance incorporates a number of elements as a corporate group with anomination committee, as indicated mainly by the fact that we have three outside directors and three outside auditors, have set the term ofoffice of directors as a single year, and have established a nomination and remuneration committee at our own discretion. We understandthat entities with auditors, entities with a nominating committee and entities with an auditing committee all have their respective advantages,
but we judge that being an entity with auditors is appropriate for us at present.
Shigeo Asano resigned in May 2020 with the expiration of his one-year term of office as an outside auditor, and Makoto Kamiya has been
appointed as a new outside director.

Compliance and Disaster
Countermeasure Pocket Book

Cooperation with local governments in case of disasters
We are proceeding with the conclusion of agreements with local governments to ensure necessary materials and support provisions in case ofdisasters. As of February 2020, we have concluded disaster agreements with 27 municipalities and 2 organizations.
32

Sugi Holdings Report 2020

Sugi Holdings Report 202033

Corporate Governance
Legal Compliance 

Information Security Basic Policy Legal compliance programs

One of the tenets of our management philosophy is contributing to1

Treat our information assets properly;shareholders, business partners and local residents not only by, need-At our corporate group, we organize legal compliance programs every

local communities. Our employees always strive to be trusted by both2

less to say, ensuring legal compliance, but also by following social

year for all employees in order to enhance their knowledge and aware-customers and business partners by serving customers with kindness

norms and acting and judging based on high ethical standards. To

ness of legal compliance.

and responding to business partners with honesty.

Clarify who is responsible for the management of important information assets, and ensure that the management of the information assets is effective;

3

Provide employees with training programs regarding information
assets on a regular basis, demand that they act in accordance withthis basic policy and related regulations, and ensure that theyclearly take responsibility in case of violation:

4

Ensure compliance with laws and regulations regarding the treatment of information assets; and5

Conduct assessments on the environment surrounding information assets and inspections on the treatment of information assets
on a regular basis, and thereby strive to improve the managementof information assets.

We strive to be trusted and respected by employees, customers,

realize our management philosophy, we will continue to ensure fulllegal compliance.

Inner reporting system

These are group programs categorized into the following: one for

To protect information regarding customers and business partners

all employees centered on case studies using a video made in-house;and live up to their trust is a social responsibility placed on our corpo-

one for employees fresh from school and mid-career employees to takerate group as a corporate citizen.

when they join our corporate group; and one for newly-appointed

We have an information security basic policy, based on which we

For early detection and correction of violation of compliance codes,

store directors and office managers to take depending on their posi-

properly and safely treat our information assets and strive to ensure

such as in-house regulations and laws, we have establishedtion. In FY 2019, the program for all employees was themed based on

our business continuity.

Compliance 110, our corporate group’s compliance counseling system,

Information Security and Wrongdoing. While reviewing the content inenabling employees to seek counseling anonymously.

light of changes in risk factors, we are continuing the programs so that

To increase the profile and understanding of the above-mentioned

they will lead us to improve our operations.

system, we have ensured that contact information for the system isdisplayed at our stores and offices, and have also distributed theCompliance handbook

Compliance and Disaster Countermeasure Pocket Book. By doing so,

To ensure full legal compliance, we have

we are striving to establish a sound reporting system.

distributed the Compliance and DisasterTake-out and loss of data

Misdirection of e-mailUnauthorized access from outside

Reinforcing the prohibitionon the connection of in-house PCs
to external equipment· Establishing an investigation system
in case of information leakage· Ensuring evidence for follow-up· Installing a firewall· Preventing virus mail from being
received

Countermeasure Pocket Book, which contains individual, specific case studies toReported cases of compliance issues (FY 2019):

present action guidelines to follow in the358 cases

course of daily operations. The directors andCounseling on working
practices and hours
1.1%
Counseling on
behaviors/actions
and harassment
7.0%

Counseling on possible
wrongdoing and violationof regulations
3.1%

employees of our corporate group are
required to act according to the handbook.
If they feel any doubt from the perspective of legal compliance when
conducting their daily operations, they are required to respond in

Total no. ofreported cases
358

Others(trouble,dissatisfaction,
etc.)
88.8%

accordance with the handbook.

· We have security rooms and security cameras at the headquarters and each office.
· We strive to increase our in-house security by distributing security cards to employees and granting them the necessary authority depending on
their roles. In addition, we focus on training employees, as needed, for example by calling attention to the inadvisability of posting improper
messages on social media.

Risk Management 
Our corporate group has a risk committee to correctly identify a wide variety of risk factors that are expanding and diversifying in step with

Risk factors to be managed

the growth of our corporate scale and to take measures in advance, thereby averting possible crises.

Risk committee
Our risk committee consists of the Representative Director & President,
directors, a full-time auditor, and a director from one of our subsidiar-

Chairpersonies (Sugi Pharmacy Co., Ltd.). The committee has at least one meeting
every six months on a regular basis, plus ad-hoc meetings as needed,
ment and decide measures to address them. In FY 2019, the committee held a total of 21 meetings.

34

Sugi Holdings Report 2020

Examples of the major risk factors to our corporate group

Business strategy risk
factors

Response to changes in the market and competitive environment, inappropriate/improper information disclosure (IR/PR)

Operation risk factors

Mistakes in prescription dispensing, product quality management (defective PB products), violation of the Act against Unjustifiable Premiums andMisleading Representations and the Subcontract Act, excessive inventory, impact of climate change, disasters, etc., and epidemics of new-type
infectious diseases

Administration systemrisk factors

Wrongdoing by directors and senior managers, management of group companies, information management (leakage of personal/classified information), cyber-terrorism, information attacks through inappropriate use of social media and other means, violation of the Labor Standards Law,harassment, violation of laws and regulations, and insider deals

Eiichi Sakakibara (Representative Director & President)

Members

Katsunori Sugiura (Representative Director & Senior Vice
President), Shinya Sugiura (Director), Toshihiko Sakamoto (Fulltime Auditor), and a director from one of our subsidiaries (Sugi
Pharmacy Co., Ltd.)

Secretariat
officeLegal Affairs Department of SUGI Holdings and General Affairs
Department of SUGI Pharmacy

in order to discuss issues regarding corporate group-wide risk manage-

Category* We have appointed directors as managers of the risk factors in the respective categories in the list above.

Sugi Holdings Report 202035

Data Section
Consolidated Balance Sheet (Unit: 1 million yen)Previous consolidated
fiscal year

Present consolidated
fiscal year

(Feb. 28, 2019)(Feb. 29, 2020)

AssetsPresent consolidated
fiscal year

(Feb. 28, 2019)(Feb. 29, 2020)

Liabilities

Current assets

Current liabilities

Cash and cash equivalents

65,311

81,347

Accounts receivable

19,79728,211

Securities

13,00010,000Inventory

59,674

63,668Others

11,58013,669(15)(13)

169,348

196,883

Allowance for doubtful accounts
Total current assets
Fixed assets
Tangible fixed assets
Buildings and structures

Accounts payable — trade58,241

82,479

Income taxes payable

4,223

5,220

Provision for bonuses

1,339

1,955

Others21,606

26,123

Total current liabilities

85,410115,779

Retirement benefit liability

5,692

6,379

Asset retirement obligations

4,960

5,517

Fixed liabilities

76,54488,705

Accumulated depreciation(32,816)(36,711)

Others

2,854

3,330

Buildings and structures (net)43,72851,994

Total fixed liabilities

13,507

15,228

Land

7,248

7,858

98,918131,007

Construction in progress

2,359

4,822

Others27,01331,346(18,648)(21,745)

8,365

9,601

Capital stock

15,434

15,43461,702

74,276

Capital surplus

24,632

24,632

2,998

3,542

Retained earnings

135,661

151,807

1,247

3,342

(9,296)(9,297)

4

4

166,431

182,577

Deferred tax assets

7,267

8,603

Guarantee deposits

19,82922,861

Valuation difference on available-for-sale securities

251

317

Others

3,119

4,265

Remeasurements of defined benefit plans

(119)

(144)

(36)

(23)

31,43139,054

Total accumulated other comprehensive income

131

172

96,132

116,874

166,563

182,750

265,481313,757

265,481313,757

Accumulated depreciation
Others (net)Total tangible fixed assets
Intangible fixed assets
Investments and others
Investment securities
Long-term loans receivable

Allowance for doubtful accounts
Total investments and others
Total fixed assets
Total assets

36(Unit: 1 million yen)Previous consolidated
fiscal year

Sugi Holdings Report 2020

Total liabilities
Net assets
Shareholders’ equity

Treasury stock
Total shareholders’ equity
Accumulated other comprehensive income

Total net assets
Total liabilities and net assets

Sugi Holdings Report 202037

Data Section
Consolidated Statement of Income andConsolidated Statement of Comprehensive Income Consolidated Statement of Cash Flows Consolidated Statement of Income(Unit: 1 million yen)
(Unit: 1 million yen)

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
Commission income
OthersTotal non-operating income
Non-operating expenses
Commission income
Rental costs
Loss on retirement of non-current assets
OthersTotal non-operating expenses
Ordinary income
Extraordinary losses
Impairment loss
Total extraordinary losses
Profit before income taxes
Income taxes — current
Income taxes — deferred
Total income taxes
Net income
Profit attributable to owners of parent

Previous consolidated
fiscal year

Present consolidated
fiscal year

(From Mar. 1, 2018
to Feb. 28, 2019)(From Mar. 1, 2018
to Feb. 29, 2019)

488,464
346,164
142,300

541,964
379,782
162,182

48,9491,324
1,151
21,872
43,185
116,483
25,81754,7081,934
1,131
25,926
48,718132,420
29,762

101
95
523
1,568
363
398
3,050

Sugi Holdings Report 2020

(From Mar. 1, 2018
to Feb. 28, 2019)(From Mar. 1, 2018
to Feb. 29, 2019)

Cash flows from operating activities
Profit before income taxes

26,05329,926

Depreciation

7,389

8,412

Impairment loss

1,184

1,546

Increase (decrease) in reserve for price fluctuation

(32)

610

Increase (decrease) in retirement benefit liability

653

646

(7)

(14)

(197)

(100)

Gain on donation of non-current assets

(271)

(397)

Interest expenses

25

22

Loss on retirement of non-current assets

11

45

93
6
595
1,660
566
381
3,304

Decrease (increase) in trade receivables(2,539)(8,391)

Decrease (increase) in inventories(7,074)(4,099)

Increase (decrease) in trade payables

7,087

24,225

Others

(197)

2,417

Sub-total

32,08554,851

25
1,061
213
329
1,630
27,237

22
1,142
249
178
1,592
31,473

Income taxes paid

(9,326)(9,508)Net cash provided by (used in) operating activities

22,89445,353

Payments into time deposits(72,000)(62,000)

Proceeds from withdrawal of time deposits

71,00066,000Purchase of securities(51,000)(37,000)

1,184
1,184
26,053
8,789
(675)
8,113
17,94017,9401,546
1,546
29,926
10,496(1,352)
9,144
20,782
20,782

Proceeds from redemption of securities

52,00042,000Purchase of property, plant and equipment(17,141)(19,389)

Increase (decrease) in allowance for doubtful accounts

Interest and dividends received

161

29

Interest paid

(25)

(18)

Cash flows from investing activities

Purchase of intangible assets

(937)

(998)

Purchase of investment securities(359)(2,011)

Purchase of shares of subsidiaries and associates

(461)

–

3

1

(3,364)(4,659)Collection of loans receivable
Payments of guarantee deposits
Proceeds from refund of guarantee deposits

126

488

Others

(227)

(853)

(22,362)(18,422)

Cash flows from investing activities(Unit: 1 million yen)

38

Present consolidated
fiscal year

Interest and dividend income

Consolidated Statement of Comprehensive Income

ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Remeasurements of defined benefit plans
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent

Previous consolidated
fiscal year

Previous consolidated
fiscal year

Present consolidated
fiscal year

(From Mar. 1, 2018
to Feb. 28, 2019)(From Mar. 1, 2018
to Feb. 29, 2019)17,94020,782

Cash flow from financial activities
Purchase of treasury shares
Repayments of finance lease obligations
Dividends paid
Others66(25)
41
20,82318,147

20,823

(0)

(268)

(244)

(4,379)(4,634)(0)(15)(13,897)(4,895)

Net increase (decrease) in cash and cash equivalents(13,365)

22,035

Cash and cash equivalents at beginning of period

47,67634,311

Cash and cash equivalents at end of period

34,311

56,347

Cash flow from financial activities
137
69
207
18,147(9,248)Sugi Holdings Report 202039

Data Section

Corporate Profile and Stock Information(as of February 29, 2020)

Major Financial and Non-financial Indexes for the Past Five Years (Unit: 1 million yen)

FY ended in February

Net sales
Operating income
Ordinary income
Profit attributable to owners of parent
Equipment investment*1
Depreciation
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financial activities
Cash and cash equivalents
End of consolidated fiscal year
Net assets
Total assets
Information per share:
Net income (unit: yen)
Net asset (unit: yen)
Dividend (unit: yen)Management indexes:
Equity ratio (unit: %)Return on equity (ROE) (unit: %)Return on total assets (ROA) (unit: %)Payout ratio (unit: %)Annual sales growth rate:
All stores — entire corporate group (unit: %)All stores — SUGI Pharmacy operations (unit: %)*2
Existing stores — entire corporate group (unit: %)Existing stores — SUGI Pharmacy operations (unit: %)*2
Prescription dispensing information:
Sales from prescription dispensing
No. of prescriptions filled by us (unit: sheet)
Prescription cost (unit: yen)Non-financial indexes:
No. of stores (store)
No. of new stores (store)
No. of M&A transactions (store)
Year-end sales area (SUGI Pharmacy) (unit: m2)
Year-end sales area (Japan) (unit: m2)
No. of full-time employees (unit: person)
No. of partner employees(converted into the number of 8-hour workers)(unit: person)
No. of SUGI Pharmacy card members(unit: 10 thousand persons)No. of SUGI Pharmacy app downloads(unit: 10 thousand downloads)*3
No. of SUGIsapo app downloads(unit: 10 thousand downloads)*4

2016

2017

2018

2019

2020

414,885
23,112
23,81014,605
10,258
5,267
13,248(9,043)(2,505)46,458

430,795
22,832
23,875
14,947
11,888
5,599
16,912(18,439)(3,506)
41,425457,047
24,76025,90016,411
11,6536,436
27,564(17,911)(3,401)47,676

488,464
25,817
27,237
17,94018,0797,389
22,894(22,362)(13,897)
34,311

541,964
29,762
31,473
20,783
20,387
8,412
45,353(18,422)(4,895)56,347

136,782
217,936230.672,160.36
45.00
62.8
11.2
11.1
19.5

Sugi Holdings Report 2020

236.082,349.90
50.00
64.5
10.5
10.6
21.2

162,046
253,989259.212,559.40
60.00
63.8
10.6
10.7
23.1

166,563
265,481287.74
2,694.59
70.00
62.7
10.9
10.5
24.3

182,750
313,757
336.21
2,956.46
80.00

Stock Information 

Trade name:

SUGI Holdings Co., Ltd.

Established:

March 8, 1982

Total number of shares authorized
to be issued by the Company:

200,000,000

Total number of issued shares:

63,330,838

Capital:15,434,588,000

No. of employees:

6,182 (on a consolidated basis)

Major operations:Control and management of companies
operating in such fields as prescription
dispensing, drugstores, and home-visit
nursing stations

+3.8
+5.8
+0.6
+1.1

+6.0
+8.3
+2.3
+2.7

+6.9
+9.9
+2.2
+2.6

+11.0
+13.8
+5.1
+5.9

69,667
6,181,431
11,27075,484
6,982,700
10,81084,108
7,704,463
10,917

91,074
8,698,045
10,471

105,279
9,833,178
10,707996
70
0480,282
107,304
4,474
6,700

1,048
75
0
517,103107,397
4,927
7,722

1,105
80
0
578,304
89,538
5,263
7,973

1,190
102
0
641,253
81,064
5,494
8,758

1,287
116
1
703,391
77,912
6,182
10,282

No. of shareholders:

30,212

Share distribution according toshareholders
Financial institutions:

12.10%

Financial instrument business operators: 2.24%

Headquarters:
Main store:
No. of stores:

Directors(as of May 20, 2020)

58.2
11.9
10.9
23.8

+8.3
+9.4
+5.7
+6.3

*1: “Equipment investment” contains expenses system investment and store renovation expenses.
*2: “SUGI Pharmacy operations” presents only the number of stores of SUGI Pharmacy.
*3: This is the number since the revamp of the app (in October 2018).
*4: This is the total number of downloads of the Walk app and the Eats app.

40

148,782
230,664

Corporate Profile 62-1 Shin’e, Yokone-machi, Obu-shi,
Aichi, 474-0011

Other domestic ­corporations:

35.19%

Foreigners:

32.20%

1-8-4 Mikawa Anjo-cho, Anjo-shi,
Aichi, 446-0056

Individuals and others:

15.87%

Treasury shares:

2.40%

1,287 (in the entire corporate group)• SUGI Pharmacy: 1,163• Japan: 113• SUGI home-visit nursing stations: 11
Representative Director &Chairman:
Hirokazu Sugiura

Major shareholders (top 10)

Name

Numberof shares
held (unit:
thousand)

Ratio ofshare­
holding(unit: %)Sugi Shoji Co., Ltd.

20,60533.33

Representative Director &President:
Eiichi Sakakibara

The Master Trust Bank of Japan, Ltd. (trust account)

2,357

3.81

Katsunori Sugiura

1,892

3.06

Representative Director &Senior Vice President:
Katsunori Sugiura

Shinya Sugiura

1,892

3.06

THE BANK OF NEW YORK MELLON 140051

1,346

2.17

Director:

THE BANK OF NEW YORK MELLON 140042

1,299

2.10

Tsuruha Co., Ltd.

1,272

2.05

THE BANK OF NEW YORK MELLON 140044

1,187

1.92

STATE STREET LONDON CARE OF STATE STREET BANKAND TRUST, BOSTON SSBTC A/C UK LONDON BRANCHCLIENTS — UNITED KINGDOM

1,163

1.88

Japan Trustee Services Bank, Ltd. (trust account)

1,153

1.86

Shinya Sugiura

Outside director:

Shigeyuki Kamino

Outside director:

Yoshiko Hayama

Outside director:

Michiko Hori

Outside full-time auditor: Toshihiko Sakamoto
Outside auditor:

Kana Yasuda

Outside auditor:

Makoto Kamiya(Notes) 1.	We possess 1,516,887 treasury shares, but exclude ourselves from the above list of
the main shareholders.
2.	The shareholding ratio is calculated after excluding our treasury shares.

Share Price Chart 
株価
Share

price
（円）
(unit:
yen)

9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000

–

–

–

1,515

1,645

–

–

–

178

350

–

–

–

–

61

出来高 7,000
Volume(unit:（千株）
6,000
thousand
5,000
shares)
4,000
3,000
2,000
1,000
0

3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2 3 4 5 6 7 8 9 10 11 12 1 2

2015

2016

2017

2018

2019

2020

Sugi Holdings Report 202041