Integrated Report 2021

SUGI Holdings Co., Ltd.
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/

The SUGI Pharmacy Group strives to

Editorial Policy

Table of Contents
Integrated Report 2021

The Integrated Report 2021 has been edited for the purpose ofcontribute to local communities by
underpinning customers’ healthy, richpresenting the SUGI Pharmacy Group’s business philosophy andattitude toward sustainability and providing stakeholders witheasy-to-understand explanations on our activities carried out based
garding the corporate activities that we deem especially important.

The report has been designed to cover the companies in the consolidated
financial statement of the SUGI Pharmacy Group to the extent possible, although the reporting coverage varies according to the item.

Coverage Period
March 1, 2020 – February 28, 2021
For some activities, more recent events have also been reported.

Notes on Our Outlook

SUGI Pharmacy Group

Drugstore operation

Home-visit nursing and elderly
home-care support

Promotion of disabled employment

SUGI Smile

The Integrated Report 2021 presents forecasts and outlooks regarding futureplans, strategies, and business results of the SUGI Pharmacy Group and its
subsidiaries. They are based on assumptions and views judged from the information currently available to the SUGI Pharmacy Group. Please note that
actual business results might differ from the expectations due to risks anduncertainties concerning future economic trends, consumer spending, market
demand, taxation, various systems, etc.

Domestic and international
wholesale trade

S Trading

Editorial Policy/Table of Contents
OVERVIEW

on them and their results. The report contains data and articles re-Reporting Coverage

lifestyles and community healthcare.

2

Who is the SUGI Pharmacy Group?

3

Management Philosophy

5Management Messages

7

Top Interview

13

To Protect People’s Daily Lives fromthe Coronavirus Pandemic

15

Figures relating to the SUGI
Pharmacy Group17

Ideal Vision

19

Growth Milestones

21

Value Creation Process
STRATEGY

Growth Strategies

23

Business Report(Sugi Pharmacy Co., Ltd.)

25

Market Environment

27

Mid-Term Management Plan 2022

29

Lifetime Value

31

Promotion of DX and Future Vision

33

Financial/Non-financial Highlights
GROWTH FOUNDATIONFoundation for Growth
Support for commencementof medical practice35

Priority Issues (Issues of Materiality)

45

Corporate Governance
DATA & PROFILE

Data & Corporate Profile

53

Financial Indices54

Non-financial indices55

Consolidated Balance Sheet

56

Consolidated Statement of Income
and Consolidated Statement ofComprehensive Income

57

Consolidated Statement of Cash Flows58

Corporate Profile and Stock
Information

1

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Integrated Report 2021

Editorial Policy/Table of Contents

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Management Philosophy

Management Philosophy
We contribute to
local communities throughour sincere, kind services.

The SUGI Pharmacy Group will remain

We help many more people smile,

the corporate group and the pride of

Hoping for the happiness of each employee,
Hoping for the happiness of each customer, andHoping for the happiness of everybody

a “pharmacy.” This is the pride ofall employees.

Since our founding, we have aimed to contribute to local communities by selling
medical and pharmaceutical products, health foods, cosmetics and daily items and bydispensing prescriptions. Today, even after we have developed into an operator of achain of approximately 1,400 drugstores with approximately 33,000 employees, weare proud that we will remain a “pharmacy.” We are working to further enhance our

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

corporate value and accomplish sustainable growth of local communities.
Highly acclaimed for its sincere and kind treatment of customers, each of whom

Corporate Watchwords and Management Philosophy
at the Time of the Establishment of the Company

was served attentively through its counseling service, our first store thrived as a kind“family pharmacy.” Since then, we have adopted the corporate watchwords of “kindness, honesty and trust” as the principles guiding us to growth. Layers of “kindness”
form “honesty” and lead to the establishment of “trust.” These tenets presented in our
corporate watchwords, together with an altruistic spirit, or “sincerity,” are reflected in

Corporate Watchwords

Management Philosophy

our management philosophy, showing our fundamental values. They have been an-

Kindness
Serve customers with sincerity
and kindness.

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

chored among all members of our corporate group and put into practice.

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

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

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 our business and HR foundation,
helps customers smile, and pleases and moves them. This leads to the happiness of
employees and the growth of the SUGI Pharmacy Group, loved by local communities.

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Integrated Report 2021

Management Philosophy

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Management Messages

To Everybody

progress of digital transformation (DX) accelerated by the COVID-19
pandemic, we will never change our underlying business philosophy.

Sakakibara: The global spread of the coronavirus infectious disease

Sakakibara: I joined the company 35 years ago, when there was(COVID-19), which was unexpected by almost everyone, is taking

only one store, which was in Nishio City, Aichi Prefecture. The con-considerable toll in terms of both deaths and cases here in Japan as

cepts that I learned from the founders in those days were “immuta-

well. On behalf of the SUGI Pharmacy Group, I would like to take thisbility and fluidity” and “shu-ha-ri.”

opportunity to express our sincere sympathy for the deceased andSugiura: We strive to value each customer and contribute to local

their families while hoping that those affected and those still fighting

communities. This is an “immutable” point that we must continue

against the disease will recover as soon as possible.

to follow, no matter what will happen. For measures for doing so,

In Japan, preparation for vaccination is underway today. I musthowever, we need to make changes “fluidly” depending on the cus-take my hat off to medical workers and other essential workers,

tomer and times.

who are committed to preparing for the vaccination. As the SUGI

Sakakibara: I still vividly remember the founders listening attentively

Pharmacy Group, we feel our responsibility once again as an opera-

to each patient for about a few hours not only about his/her medi-

tor of drug stores underpinning social infrastructure, and at the samecine and disease but also about other topics. Patients with the sametime, we understand that our responsibility will continue to grow insymptom might need different medicines, and patients with similar

the future. As management, we have nothing but words of appreci-family structures might need quite different types of counselling. I

ation for our employees for being engaged in their operations at thestrongly felt that such an attitude toward dispensing prescriptions

front line to fulfill their responsibility to sustain social infrastructure,

represented shu, the starting point for a pharmacist to serve a pa-

as well as for our business partners for dedicating themselves to en-tient. The founders established a register for each patient to manage

sure the supply of products.

a wide variety of information, such as his/her medical records, pre-Sugiura: Regrettably, no outlook has been presented yet for the

scriptions, and his/her family’s medical records. I think that this wasend of the COVID-19 pandemic. While implementing anti-COVID-19“ha” for the founders.

measures to the extent possible, we will continue to work hard with

Sugiura: “Shu-ha-ri” is a concept often referred to in kado (flower

our first priority on ensuring an environment in which all employeesarrangement) and budo (Japanese martial arts). I understand thatcan work without any worry and providing a sense of safety to local“shu” means making a model as instructed by your master; “ha”

residents.

means making your own model based on the completed model; andFurther Growth under the New Structure
through the Concepts of “Immutability and
Fluidity” and “Shu-ha-ri”

Sakakibara: The founders launched a prescription dispensing busi-“ri” means going beyond it and creating a new model.
ness when the separation rate of dispensing and prescribing functions was still low and expanded one pharmacy to approximately
1,400 stores over 45 years. They achieved “ri” by creating such an
Sakakibara: While Ms. Akiko Sugiura was appointed as Advisor

unprecedented model. With the baton handed over from the found-in 2018, Mr. Hirokazu Sugiura was also assigned as such this time.

ers, I’m now working on new measures, such as introducing digital

Now that the founders have retired from the management front line,

technology, but this is a combination of the extension of the previous

I personally feel sad. However, both the new president and I havebusiness style and a new model. I feel that I’m still halfway to “ha”

been working a long time while watching them, and this makes meof “shu-ha-ri.”

realize that we need to maintain governance-based management

Sugiura: Under the new management structure, we will strive toand continue to enhance corporate value. I feel a strong sense ofenhance our corporate value and social value by carefully continuing

responsibility.

each effort for developing our stores and areas. While striving to

Sugiura: The management structure will change greatly, but there isachieve “immutability and fluidity” and “ri” of “shu-ha-ri,” we will

and will be no change in what has been valued by the founders since

dedicate ourselves to accomplishing sustainable corporate growth

the establishment of their store. Although we will proceed with newand contributing greatly to society. In this regard, we would like tomeasures in some fields in line with changes of the times, such as theask for your continued support.

“We value each customer.”This determination underpins our operations.
At the SUGI Pharmacy Group, we will continue toprovide energy, smiles, health, and happiness.

Eiichi Sakakibara

Katsunori Sugiura

Representative Director & Chairman

Representative Director & President

56Integrated Report 2021

Management Messages

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Top Interview

By integrating the real and the digital with“health” as the

keyword, we will strive to support yourhealthy and richlives and enhance our corporate value andsocial value.

Katsunori Sugiura
Representative Director & President

Q.

ance associations, medical care and elderly nursing care workers,

possess qualification as a pharmacist and have inherited the businessa medical care service operating company that provides support for

Tell us about the SUGI Pharmacy Group’s future vision.

and players in many other fields. With “health” as the keyword, we

philosophy of expanding the field where pharmacists can demon-commencement of medical practice and online medical care counseling platforms.

would like to ensure cooperation with stakeholders sharing the same

strate their abilities. In Japan, where there is reportedly a shortage of

Sugiura: The ongoing spread of COVID-19 is making many people

ambition and establish a healthcare network that values “ties” andpharmacists, how to secure pharmacists is a hurdle for new entry into

Our growth speed is also one of our advantages. We are striving

realize how important it is to be and appreciative of being in good

“trust.” We are striving to achieve a care cycle that covers all thethe market of prescription dispensing services. At the SUGI Pharmacy

to expand our operating scale through strategic dominance of setting

health. Medical care and medicine are relevant to people all throughstages of health management, health improvement and disease pre-Group, however, we have approximately 3,000 pharmacists, which

up new stores mainly in the metropolitan areas in Kanto, Chubu andtheir lives in a wide variety of manners. When they are healthy, they

vention, thereby operating drugstores indispensable for local com-

is a great advantage for us. How can we retain pharmacists despite

Kansai. At the same time, we are also reinforcing our efforts to es-

are engaged in self-care for the purpose of primary prevention andmunities.

the current shortage? This is partly because we enable pharmacists totablish stores in the Hokuriku area. For the past few years, we havesecondary prevention. When they have a disease, they receive med-

concentrate on what they can contribute to as such. In addition, we

continued to set up 120 stores per year, with the number of our stores

ical care and take medicine to treat their symptoms in then acuteQ.

ensure that they can demonstrate their ability in various fields on theirreaching 1,391 as of the end of February 2021. In addition, whilephase or the chronic phase. When they become old enough, they

Tell us about the main features and advantages of the SUGI

request, even if the field is outside prescription dispensing, and thatdeveloping physical stores, we are also increasingly introducing digitalneed elderly nursing care and daily life support. How medical care

Pharmacy Group.

this approach is visible even from the outside. Other factors include

technology in various fields. The consequence is synergy between thethe concentration of our stores in densely populated areas and thedigital and the real. While digital technology is making physical storesand medicine are relevant varies according to their health stage. In the
SUGI Pharmacy Group, we are proceeding with the Total Healthcare

Sugiura: In the SUGI Pharmacy Group, Hirokazu Sugiura and Akiko

introduction and operation of working styles and overtime work sys-

even more robust, the increase in the number of physical stores is

Strategy, with which we aim to ensure contact points with custom-Sugiura, both the founders and pharmacists with a strong passion fortems flexible enough to accommodate pharmacists’ requests.

enhancing digital efficiency. Behind the SUGI Pharmacy Group’s rapid

ers regardless of their health condition and provide each customer

prescription dispensing services, realized growth by continuing to take

Another feature and advantage is that we are trying to expand

growth is the fact that management, which has inherited the found-with the most appropriate product and service well-tuned to his/heron challenges in developing a chain of prescription dispensing drug-

our various operating fields with “health” as the keyword. This is aers’ passion, can make decisions quickly through monolithic unity

condition through an integration of the real and the digital based on

stores, which were still rare in Japan at the time of our establishment.

critical point for achieving the Total Healthcare Strategy. We are asso-

based on a clear vision. I believe that a company can contribute to

a community-oriented approach. To satisfy customers and continue

We have been engaged in prescription dispensing services deeply

ciated extensively not only with the prescription dispensing drugstore

society only if it can take full advantage of opportunities for growthincreasing their lifetime value, it is necessary for the SUGI Pharmacy

and growing rapidly, and this is one of the main features and advan-

operator SUGI Pharmacy but also with, for example, the home-visit

without missing them.

Group to work in cooperation with local governments, health insur-

tages of the SUGI Pharmacy Group. Both Chairman Sakakibara and I

nursing and elderly home-care support provider SUGI Medical and78Integrated Report 2021

Top Interview

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Q.

While striving to obtain growth opportunities with “health” asthat customers could buy. While causing such inconvenience to cus-

Tell us about the mega trends and social issues expected to oc-

the keyword, we understand that it is important to identify businesstomers, we placed a heavy burden on employees, who needed to

cur in the future business environment and the opportunities

risks. The direction that the SUGI Pharmacy Group is aiming for basi-

serve customers and operate stores in manners different from usual.

and risks to be experienced by the SUGI Pharmacy Group in

cally aligns with that of the Japanese government. Still, a wide variety

Looking back on the past year, I find that there are some points tosuch an environment.

of risks are assumed, such as unexpected establishment of laws andreflect on and improve especially in terms of well-tuned operations.

regulations without involvement of the SUGI Pharmacy Group, mis-

However, given that the spread of the infection continued to change

Sugiura: Japan is one of the best countries in the world in terms oftakes due to human errors, long-term population decline, natural dis-depending on the time and the area, each store did its best while

longevity, but it is said that the gap between the average lifespan andasters, and acceleration of changes in society. At the SUGI Pharmacy

checking the situation.

healthy lifespan, namely the period to be spent in an unhealthy con-Group, we will actively invest for our growth so that we can catchdition until the final moment, is nine years on average for men and 12

growth opportunities. At the same time, we believe that it is impor-Q.

years on average for women. The SUGI Pharmacy Group’s operations

tant to evaluate a wide variety of risks appropriately, identify a com-

Has there been any change to the ongoing Mid-Term

are intended to contribute to the extension of the healthy lifespan.

prehensive balance between opportunities and risks from the per-Management Plan 2022 due to the coronavirus pandemic?

We are committed to our business based on the belief that the more

spective of management, and run the cycle of PDCA smoothly while

we work, the more beneficial it will be to customers. The domestic

ensuring that the checking function of governance works effectively.

Sugiura: The Mid-Term Management Plan 2022 comes after theConsolidation of Our Foundation and Framework for Growth in FY

healthcare segment is growing with the background of the rise in
the aging of the population. The Japan Revitalization Strategy, for-Q.

2015 and the Aggressive Management Approach in FY 2018. Setting

mulated by the Japanese government, estimates that the healthcare

Can you review the business results achieved in such an envi-

the slogan “Enhancement of Our Corporate Value by Maximizing

market in a broad sense will reach the 37 trillion yen level in 2030. At

ronment in the fiscal year ending February 2021 and give us

Customers’ Lifetime Value,” we are proceeding with a wide variety

the same time, there is the social challenge of rising medical care costs

your evaluation?

of measures from the two viewpoints of “growth strategy” and “reinforcement of the management foundation.” Based on the growthexerting pressure on the national budget. The Ministry of Health,Labour and Welfare has expressed its expectations of pharmacies,

Sugiura: In terms of numerical results, net sales, which continued to

strategy, we will strive to set up more than 120 new stores per year.

through the Pharmacy Vision for Patients, to play a role in the com-increase from our establishment in 1976, were 602.5 billion yen, up

In the field of prescription dispensing, we will set up not only “phar-prehensive community care system. There is a call for pharmacies to

11.2% from the previous year. Operating income increased to 33.7

macies with the function of prescription dispensing,” which consti-

make a shift by 2035 from the present operating style of “pharmacies

billion yen, up 13.2% from the previous year, while profit attribut-tute an existing type, but also “pharmacies featuring medical malls

located near medical institutions to support the separation of dispens-able to owners of parent increased to 21.1 billion yen, up 1.6% year

or clinics,” which serve as a one-stop medical care provider underpin-

ing and prescribing functions” to “pharmacies to support the separa-from the previous year. We cannot explain last year’s business resultsning local medical care infrastructure, and “on-the-premises” phar-tion of dispensing and prescribing functions with their focus on local

without referring to the impact caused by COVID-19. As a result ofmacies, which are located on the premises of medical institutions topatients” by using ICT, providing 24-hour services, and offering home

an increase in demand due to the pandemic requiring people to stay

support increasingly sophisticated medical care. By developing these

healthcare and health support. High expectations are placed on phar-home, sales of daily items and food products, which are consumed

three types of pharmacies, we will strive to establish a network ofmacies to serve as “family pharmacies” from which local residents

mainly at home, were higher than expected. On the other hand, sales

prescription dispensing and medical care. Moreover, we will provide

Under the new management structure, we will continue to im-

can seek pharmaceutical advice on medicines without hesitation atof cosmetics were lower than expected. In addition, while a rise in thea wide variety of products and services well-tuned to the needs ofplement measures based on the direction and priority set by our pre-any time and to carry out high-level pharmaceutical management.

awareness of protection against the infectious disease led to an ex-

each customer in a timely manner both at physical stores and online,

decessors. Regarding investment for growth, we will pay attention

The direction that these policies are aiming for exactly aligns with thepansion in the sales of sanitary products, such as alcohol disinfectants

thereby striving to increase each customer’s satisfaction and maximize

to ROI (return on investment) as one of the indexes. While ensuring

direction that the SUGI Pharmacy Group’s Total Healthcare Strategy

and masks, less people caught a cold or enjoyed trips than usual,

our customers’ lifetime value. Our quantitative targets to be achieved

efficiency in operations with an awareness of operating income mar-is aiming for. With interest in “health” growing throughout society,causing a shrink in the sales of cold medicine and motion sickness

through these measures by the final year of FY 2022 are net sales ofgin, we will strive to increase sales and operating income and improve

great business opportunities lie ahead of the SUGI Pharmacy Group.

medicine.

710 billion yen and operating income of 37 billion yen. We will not

ROE.

Seen from a global perspective, an increase in the aging of the

To fulfill our responsibility of serving as infrastructure underpin-

population is not unique to Japan. In the SUGI Pharmacy Group, wening local residents despite the coronavirus pandemic, we continued

On the other hand, since the coronavirus pandemic is raising

are making efforts in Japan to respond to the rise in the aging of theto operate stores while introducing anti-infection measures promptly

non-face-to-face needs, we will accelerate the reinforcement of DX

Tell us your thoughts about human resources as one of the

population and extend the healthy lifespan. If we can ensure thatand flexibly, such as social distancing, droplet prevention screens, dis-ahead of the original plan. Furthermore, to ensure many more con-investment fields for growth.

such efforts serve as a precedent model applicable to foreign coun-

infection, and ventilation. There were times when customers neededtact points with overseas customers when there is an ongoing decline

tries, we might have opportunities to expand our business field in

to wait in line, when some products continued to be out of stock,in the number of visitors from abroad, we will also accelerate theSugiura: The SUGI Pharmacy Group’s Management Philosophy states

cooperation with local partners sharing the same ambition.

and when we had no choice but to limit the number of products

formation of partnerships with a wide variety of companies.

that “We help many more people smile, Hoping for the happinessrevise these figures even during the coronavirus pandemic.
Q.

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Integrated Report 2021

Top Interview

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

of each employee, Hoping for the happiness of each customer, andize our growth. We believe that by doing so, we can contribute eveninfrastructure underpinning medical care infrastructure in their local

forts, it will mean that we can contribute greatly not only to improving

Hoping for the happiness of everybody.” This indicates our philos-

more greatly to society and that such growth of our operations willcommunities and that such stores develop as a local base supporting

patients’ health by ensuring that they take their medicine appropriate-ophy that we cannot make customers happy without making ourenable our corporate value to be maximized. For shareholder returns,

safety and security for everyone. In addition, we place an emphasis

ly but also to reducing medical care costs and cutting CO2 emissions

employees happy and helping them smile. When employees of thewe will pursue the maximization of shareholder value with consider-on ensuring diversity in working styles so that each employee cangenerated at the time of disposing of leftover medicine as waste.

SUGI Pharmacy Group realize sound growth, they can provide cus-

ation given to balance with our investment for growth.

work according to his/her life stage, such as parenting and elderly

Toward solving environmental problems and social problems, it is,nursing care, without restrictions on working time or places. While in-of course, necessary to proceed with measures in the SUGI Pharmacy

tomers and patients with benefits. When they see that customers
and patients are happy, they feel even more motivated. This “spiralQ.

troducing a local employment system, a working-hour option system,

Group. To make even greater contribution, however, the key lies inof smiles” is the key to our HR strategies. Taking a wholistic view

Tell us your thoughts about ESG and the SDGs.

and a teleworking system, we ensure communication with those on

how to ensure cross-sectional cooperation and work in tandem withleaves of absence on a continuing basis. We, thus, provide an envi-

others. We are ready to talk to and cooperate with those who shareital technology, we will make HR investment to embody the SUGI

Sugiura: The concepts of Environment, Social and Governance (ESG)

ronment and opportunities for each employee to fully demonstrate

the same ambition and want to work with us.

Pharmacy Group’s Management Philosophy.

and the Sustainable Development Goals (SDGs) are becoming known

his/her ability, thereby ensuring excellent human resources. Based on

Another element that we need to focus on to ensure our sus-

covering not only employment and education but also the use of dig-extensively in society. In my opinion, there are many exactly overlap-

our determination to contribute to society and local communities, wetainable growth as a private corporate group is “G (governance)”

Q.

ping points between the concepts of ESG and the SDGs and what

have been proceeding with various efforts so far, and they themselvesof ESG. Our corporate group was managed under the strong lead-

What are your thoughts about shareholder returns?

we have been doing since the establishment of the SUGI Pharmacy

are highly social efforts leading to an increase in the value of the “Sership of the founders through monolithic unity of the other mem-Group based on the philosophy of realizing our vision.

(social)” element. To solve social problems and develop local medical

bers. Now that the founders have resigned from management, we

Sugiura: For the dividend to our shareholders in the fiscal year end-

For example, approximately 80% of the stores of the SUGI

care, it is necessary for a corporate group not to work alone but tohave a new management structure. While inheriting the founders’ing February 2021, the total of the interim dividend and year-end

Pharmacy Group are located in the suburbs, not in areas near sta-

strengthen cross-sectional cooperation with medical care institutions

determination as an immutable cornerstone, we will reinforce ourdividend was 80 yen per share, the same level of that of the previous

tions. This is one of the SUGI Pharmacy Group’s features differentiat-

and administrative agencies.

governance system and enhance the transparency and efficiency ofyear. When there are many more growth opportunities to expand ouring ourselves greatly from competitors. Behind this strategy of settingThis approach is also applicable to the element of “E (envi-

our management. We have three outside directors and three outside

operations in a wide variety of fields with “health” as the keyword,

up stores in such locations is our community-oriented approach. In

ronment).” We are reducing the use of power and plastics at theauditors, who supervise and monitor the decision-making process-we will invest in equipment, DX, personnel and other factors to real-

the SUGI Pharmacy Group, we strive to ensure that our stores serve as

headquarters and approximately 1,400 stores. To improve thees of the Board of Directors and the effectiveness of the Board ofglobal environment in a genuine sense, however, we need to en-

Directors from independent and objective positions. We also have thesure cross-sectional cooperation and work in tandem with outside

Nomination and Remuneration Committee, established on our own

companies and organizations. Seen from a bird’s-eye view, a supply

discretion, with outside directors constituting the committee’s major-

chain consists of drugstores as retailers, wholesalers in the retailers’

ity. By implementing these measures, we intend to further improve

upper stream, manufacturers in the wholesalers’ upper stream, andour governance.

raw-material providers in the manufacturers’ upper stream. A positive
impact on the environment is generated only if there is an extensiveQ.

framework in which each of these elements constituting a supply

Can you conclude by giving a message to stakeholders?

chain cooperates with one another and considers the reduction ofnegative impact on the environment based on a wholistic view. Last

Sugiura: To help extend each customer’s healthy lifespan and to real-

year, the Japanese government declared that it will strive to achieve

ize our philosophy, namely to contribute to local communities, morecarbon neutrality by 2050. Specific measures toward reducing CO2

dynamically, I believe that it is important to realize mutual coopera-

emissions are now underway in a wide variety of industries. However,tion and joint creation in tandem with a wide variety of local gov-

to reduce CO2 emissions is a mere method for accomplishing an evenernments and companies sharing the same ambition with us under

greater contribution, namely the reduction of negative impact on thethe keyword “health.” If not only customers and patients but also

environment. It is important to work cross-sectionally while sharing

employees and local residents feel happy and if it consequently leads

the same ambition.

to an increase in corporate value of the SUGI Pharmacy Group and to

Another big social problem that we can address directly toward

the generation of sufficient shareholder returns, I’m convinced thatthe solution is leftover medicine. It is estimated that the medicine un-

we can create considerably great value in a wide variety of fields.

used by patients is equivalent to nearly 50 billion yen per year. The

Together with stakeholders, we will continue to work hard to achieve

problem of leftover medicine contributes to a rise in medical care costs.

our vision of creating a future in which everybody will smile.

If we can reduce this amount by at least 10% to 20% through our ef-

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Integrated Report 2021

Top Interview

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

To Protect People’s Daily Lives from the Coronavirus Pandemic– Kind “Family Pharmacy” as Our Starting Point –Amidst the ongoing global spread of the coronavirus infectious disease (COVID-19), the SUGI Pharmacy Group has
continued store operations, filled with a sense of responsibility as a drugstore operator whose core lies in prescription dispensing services and support for home healthcare. By implementing the philosophy valued since ourestablishment, namely “a kind family pharmacy,” we have contributed to support for local communities and local
medical care. We will continue to make utmost efforts in preventing the spread of the infectious disease and playa role as a local base supporting residents’ healthy lives and underpinning their safety and security.

To Protect the Health of Local Residents
Free Online Service of HealthCounseling from Doctors Provided
For about a month from May 20 to June 30, 2020, we
provided a free online service of health counseling fromdoctors through the pedometer app SUGIsapo Walk. This
enabled users not only to receive regular health counselingbut also to seek chat counseling from doctors specializing
in relevant fields to address a wide variety of medical andhealth questions and anxieties occurring during the prolonged coronavirus pandemic. We think that by handling a
total of 35,147 cases, this counseling service contributed toreducing risks of secondary infection of the novel coronavirus and the burden on medical institutions.

3/1
4/26
5/3
5/10
5/17
5/24
5/31

Health counseling cases through the SUGIsapo
app during the coronavirus pandemic
Total number from May 20 to June 30

35,147

6/7
6/14
6/21
6/28
7/5
7/12

“Protect Yourself from the New
Coronavirus!!” Distributed as a Health
Information Leaflet

To Protect Customers and Employees’ Safety
Anit-Infection Measures at Stores
For store operations, we have placed the first priority on ensuring the safety of customers and employees. We have implemented a wide variety of measures, including social distancing. To reduce risks of droplet infection, we have set acrylic partitions
on medication instruction counters. To enable pharmacists to speak with patients appropriately all the more for the coronavirus
pandemic, we have reinforced our measures by introducing into Nagoya University’s Hospital Store and some other stores of
SUGI Pharmacy a heat detection system featuring thermal cameras and AERO SHIELD (germicidal irradiation equipment using
UV-C, whose germicidal effect is reportedly the strongest of all types of UV, for disinfecting air).

Featuring “Protect Yourself from the New Coronavirus!!”a health information leaflet issued by the Sugiura Memorial
Foundation was distributed at all the stores. The leaflet provides easy-to-understand explanations on five habits thatyou can try simply in order to protect yourself from the infectious disease. The leaflet also includes features on “What
We Can Do Now” and “Take Care Not to Lead a SedentaryLife at Home.” We also strove to ensure that pharmacists
could speak with patients all the more appropriately during
the coronavirus pandemic, thereby raising local residents’awareness of maintaining their good health.

Special Allowance Provided to All Employees, including Part-time Workers
As essential workers, who continued to work at the front line despite risk of infection, our employees served manycustomers who needed masks and other sanitary products. To reward them, we provided a special allowance to all
the employees, including part-time workers.
In addition, we dispatched staff from the main office to stores to reduce the burden of the stores’ staff. We, thus,
rallied all our forces to continue store operations.

Thermal camera

Medication instruction counter with AERO SHIELD and acrylic partitions

13

14
Integrated Report 2021

To Protect People’s Daily Lives from the Coronavirus Pandemic

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Figures relating to the SUGI Pharmacy Group
Other

0.1%
Prescription
dispensing

Food

18.5%

Net sales on a consolidated basis

602.5

Up

+11.2%
from thepreviousyearbillion yen

Household ware

19.7%

Operating income on a consolidated basis

33.7

Up

+13.2%
from thepreviousyear

Stores21.8%

Percentage ofsales by category of
the SUGI Pharmacy
operations(excluding sales ofJapan)*As of the end of February 2021

1,391

Healthcare

21.4%

1,267

(Including 1,050 prescription
dispensing stores)

11.5%

78.2%

21.8%

No. of prescriptions filled by us

10.1

Up

+11.7%
from thepreviousyear

millionbillion yen

53,528(Unit: 10 thousand prescriptions)

SUGI Point membership

320

18.04

million visitors

111 stores 13 stations

7.72

Digitalmembership

million members

million members

Up

+2.7%
from thepreviousyear*Total no. of downloads of SUGI Pharmacy app and
SUGIsapo app, as well as registrations of SUGI
Pharmacy as a “family pharmacy” through kakari, the“family pharmacy” app developed by MedPeer

6,710

No. of experts *Including partner employees

No. of prescriptions filled by the SUGI Pharmacy

1,000

800

Women

600

47.2%

400

0

Integrated Report 2021％

Home-visit
nursing stations

No. of employees *No. of full-time employees

200

15

82.9

Japan

Employees

Sales of prescription dispensing

No. of medical institutions whose
prescriptions are filled by us

Kansai area

375 stores 505 stores 34 stores 477 stores

No. of annual visitors

Prescription dispensing

117.5

Hokuriku area

Prescription dispensing

88.5%

2020

Chubu area

Customers

Merchandising

FY

Kanto area

Percentage of prescription
dispensing storesstores

18.5%

2010

Record-highnumber of newly
establishedstoresSUGI Pharmacy

Changes in the percentages of sales from merchandisingand prescription dispensing (only at SUGI Pharmacy)

FY

121
storesstoresBeauty items

billion yen

Newlyestablished

No. of stores2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (FY)

Men

Gender ratio

52.8%【Pharmacists】【Beauty advisers】

3,025

1,208

【Nationally certified dieticians】 【Nurses】 【Registered pharmaceutical distributors】

466 92

8,527
Figures relating to the SUGI Pharmacy Group

16

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Ideal Vision
We are proceeding with the Total Healthcare Strategy as a business model with which we are striving to underpin
every health stage of our customers and patients, ranging from self-care to medical care & medication to elderly
nursing support & daily life support. By integrating our human resources and digital assets, we will continue tocontribute to local communities and strive to implement the philosophy valued since our establishment.

From Self-Care to Medical Care & Medication to Elderly Nursing
Support & Daily Life Support
Contribute to Local Communities through Total Health Support
Self-care category

Elderly nursing support anddaily life support category

Medical care and medication category

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

Joint Development of SUGIsapo App
Enabling Users to Continue Healthy Habits
EasilyApproach to Customers in China through a
Cross-border App
Inagora Holdings Co., Ltd.

MedPeer Inc.
Health checkup

Prescription dispensing

Online counseling, medical treatment,
and medication instruction
Fitness
Diagnosis

Treatment

Healthcheckup
Health counselingand measurement

Long-term elderly
nursing care

Chronic-phasemanagement

Secondary
prevention

Elderly
nursing care

Primary prevention

Personal healthrecord (PHR)(Healthy lifestyles)

Terminal care

Terminalstage

Inagora operates Wando, a cross-border app, as a prod-

MedPeer Inc. operates an online doctor community

uct in the inbound and cross-border business specializing

site, in which 120,000 doctors are registered, and devel-in Japanese products. To reinforce the inbound business,

ops an online medical business and preventive care business

we receive from the company its expertise on Chinese

through the use of IT. For the pedometer app SUGIsapo

consumers’ needs and consumption behavior, as well as

Walk, a result of our joint development project in the self-marketing know-how. At the same time, through Wando,care business, the number of downloads has exceeded 1.5

we approach to consumers which are sensitive to trends inmillion. We will continue to take advantage of SUGIsapo

China. The first joint effort is the launch of sales of the skin-

Walk/Eats/Deli to effectively provide services well-tuned forcare item Prieclat and other products privately developed byeach customer’s lifestyle and health problem.

the SUGI Pharmacy Group through Wando in spring 2020.

Capital and business alliance concluded in March 2018https://medpeer.co.jp

Capital and business alliance concluded in January 2020
https://www.inagora.com

Showing a commitment to local residents’ lifetime efforts for disease prevention and health management, andcontributing to their good health through a full lineup of care
Healthcare network connecting approximately 1,400 physical stores and local communities

SUGI Pharmacy
Group

Total Healthcare Strategy through the Integration of the Real and the Digital
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-care category, the medical care and medication category, and the elderly nursing support and daily life support category. The
strategy is intended to ensure contact points with customers, regardless of their health condition, and provide optimum products andservices appropriate for the condition of customers in different stages by integrating our physical advantages with digital technology.
To push forward with the strategy, we emphasize close ties and trust between local governments, companies and their healthinsurance associations, and medical and elderly nursing-care workers. By expanding our network even outside our corporate group,
we are striving to become an operator of drugstores as an indispensable entity for local communities.
Hospital

Fitness clubResearch institute(university)

Strategic Dominance of Setting Up
New Branches around Key Stores

Pharmacy

Healthcare network

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

Key store
Home-care
support clinic

Health insurance
association

Health checkup institution

Elderly nursing service provider
Local government(Municipality and comprehensive community support center)

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 ofhealthcare networks evolving around our key stores.
* Our key stores fulfill the enhanced function of health support expected to beprovided by drugstores. The stores feature a self-service space for customers to take health measurements while providing health counseling, healthinstruction and prescription dispensing services. They also feature a medical
institution, lease and sell welfare products, and provide home healthcare.
In addition, they also have a community space where events by nationallycertified dieticians and pharmacists hold events on a regular basis.

Expansion of the Support Business forPreventing Lifestyle-related Disease fromBecoming Severe

Acceleration of Our Efforts to Set up Storesin Taiwan and Creation of Social Value in the
Asia Area

PREVENTS Inc.
PREVENTS Inc. provides health insurance associations with aprogram for preventing lifestyle-related disease from becoming serious in cooperation with doctors. In our joint project with this company, we will strive to expand the support business for preventing
lifestyle-related disease from becoming serious through the use of
SUGI Pharmacy’s nationally certified dieticians and the introductionof each other’s business partners. This alliance means that our business portfolio newly includes support for those at high risk to prevent
their disease from becoming severe, enabling us to provide a full lineof support, ranging from disease prevention to treatment. We will
make further contribution by extending local customers and patients’
healthy lifespans and making medical care costs more appropriate.

Great Tree Pharmacy Co., Ltd.

Business alliance: June 2020

https://prevent.co.jp

Great Tree Pharmacy is a drugstore chain operator runningapproximately 200 stores in Taiwan. We will provide the company with our total healthcare business model established by
the SUGI Pharmacy Group, as well as some of our products
and trademarks. In addition, both parties share each other’s
management know-how. This will enable both of us to further
proceed with our business development. Through the alliancewith Great Tree Pharmacy, we will make attempts for new value creation, which will lead to creating not only “economic
value” but also “social value” in the Asia area.
Business alliance: November 2020
https://www.greattree.com.tw

17

18
Integrated Report 2021

Ideal Vision

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Growth Milestones
Partly because our founders Hirokazu Sugiura and Akiko Sugiura are both pharmacists, the SUGI Pharmacy Group
displays a firm sense of determination especially in terms of prescription dispensing services. This has led us totake on the challenge of developing a chain of prescription dispensing drugstores, which were still rare in Japan
at the time of our establishment. In addition, we have been working on the provision of home-visit prescription
dispensing service since our early days in order to serve as local infrastructure in the super-aging society. Inheriting
the determination valued since our establishment, we will continue to create value required by customers.

Business Development
2001 ● Listed on the first section of the Tokyo Stock Exchange
2007 ● Acquired full ownership of Japan Co., Ltd.
2008 ● Changed the trade name Sugi Pharmacy Co., Ltd. to2013 ● Established the first key store in Kumami
2016 ● Established the Obu Center as our own logistics center2018 ● Concluded a capital and business alliance with the

SUGI Holdings Co., Ltd.

Holdings Co., Ltd.
● Established S Trading Co., Ltd. to supply products

MedPeer Group● Transferred to a holding-company system due to an

to both domestic and foreign markets● Established DCP Solution Co., Ltd. to provide support

incorporation-type company split, and newly established

Sales(Unit: 100 million yen)

● Concluded a business alliance withfor doctors to open clinics

6,000

Great Tree Pharmacy Co., Ltd.

2019 ● Established Nagoya University Hospital Store as an

Sugi Pharmacy Co., Ltd. and SUGI Medical Co., Ltd.
● Acquired full ownership of Izuka-yakuhin Co., Ltd.

1976

2020 ● Concluded a capital and business alliance with Inagora“on-the-premises” pharmacy

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

5,000

Products and Services
2002 ● Launched a home-visit prescription dispensing service for2014 ● Launched rental and sales of welfare products2018 ● Launched a shared pick-up and drop-off service

individual patients

2003 ● Launched aseptic prescription dispensing in a clean room2005 ● Launched facility-visit prescription dispensing services for2020 ● Released a lifestyle-related disease risk report using
big data● Launched the meal delivery service SUGIsapo Deli

2019 ● Launched a specific health guidance service by nationallyfacilities for senior citizens

certified dieticians2008 ● Launched home-visit nursing and elderly home-care services

4,000● Released the pedometer app SUGIsapo Walk
● Released the diet record app SUGIsapo Eats

3,000

CSR and ESG

2,000

2008 ● Began participation in the Pink Ribbon Campaign
2009 ● Established SUGI Smile Co., Ltd. to promote disabled2013 ● Launched donation of AEDs to facilities for senior citizens

2021 ● Certified for two years in a row as an outstanding● Launched donation of medical wigs to breast cancer patientsenterprise in terms of health and productivity

2014 ● Launched support for children with intractable diseases andemployment● Launched cosmetic therapy at facilities for senior citizens

management● Established the ESG Promotion and Sustainability

their families

2017 ● Concluded comprehensive partnership agreements with local

and hospitals

Committee

governments toward realizing sustainable community development

2018 ● Concluded a partnership contract with FC Kariya,

1,000

a nonprofessional soccer team
● Acquired Platinum Kurumin certification
The numberof drugstoresexceeds

Establishment

The numberof drugstoresexceeds

The numberof drugstoresexceeds100.

1,000.

500.

0

'76

'82

'88

'89

'90

'91

'92

'93

'94

'95

'96

'97

'98

'99

'00

'01

'02

'03

'04

'05

'06

'07

'08

'09

'10

'11

'12

'13

'14

'15

'16

'17

'18

'19

'20

(FY)

19

20
Integrated Report 2021

Growth Milestones

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Who is the SUGI Pharmacy Group?

Value Creation Process

ing
t
n
e
Pres lueva

Healthimprovement
app
Shopping
truck
service

Shopping
supportIncreasingly serious social problems

Shift to DX● Aging population andlower birthrates

Newbusiness

Preventive
care
programe-commerce

Food

Changesin society

Ac
co
mp
l

Reducing
medical costs
Contributing to
the global
environment

Home-visit
prescription
dispensing

Healthcare● Use of plastics

Solving social
problems

Shift to DX● Increase in medical costs● Global warming

val
ue
for
so
cie
ty

aging
population andlowerbirthrates

s
ile
sm

Busin
ess o
pera
tion
s fo
r cr
eat
ing

re everyone
ty whe
is h
ocie
s
ap
a
py
g
n
i
wi
si h
t
AddressinghWhile responding to increasingly serious social problems, technology innovation and changes in consumers’ values, we leverage our strengths in developing business and services in cooperation with business partners, with“merchandising” and “prescription dispensing” serving as our two main business sectors. We strive to create newvalue for customers and accommodate local health needs. At the same time, we endeavor to grow into a
corporate entity that can gain the support of the public and realize a society where everyone ishappy and smiles.

Merchandising

Medication Prescription Medication
follow-up dispensing instruction

Beautyitems

Maximizing customers’
lifetime value (LTV)

Household wareTechnology innovation

Medication
management

Partnership withmany stakeholders● Promotion of 5G andexpansion of IoT● Integration of the real
and the digitalfor cre a t i n

gv

ur

ce

for c

re a t i ngvalUnderpinning local medical care with Kindness , Honesty and Trust

ur

ce

for c

re a t i n

gv

al

ur

ce

Re
tu
va rn
lu ingeSoundfinancialfoundation

ue

al

The S
UG
I

ce

ue

ur

ue

The
SU
G

ue

The S
UG
I

ue
al

Expertise on
prescription
dispensing

acy Grou
arm
p’s
Ph

gth
ren
st

gv

So

re a t i n

acy Grou
arm
p’s
Ph

gth
ren
st

for c

Plenty ofexperts

So

ce

Membership of
18 million as thecornerstone

gth
ren
st

So

ur

rmacy Group
ha
’s
IP

So

Communityoriented store
networkacy Grou
arm
p’s
Ph

gth
ren
st

So

● Shift from ownershipto sharing

acy Grou
arm
p’s
Ph

gth
ren
st

● Changes in
consumption behavior

The S
UG
I

● Diversification ofvaluesThe S
UG
IChanges in values

for cre a t i ngvalContributing to local communities

21

22
Integrated Report 2021

Value Creation Process

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Business Report (Sugi Pharmacy Co., Ltd.)

MerchandisingAt all stores, we strengthened the lineup of products thatwere typically purchased at drugstores and that would contributeto improving physical strength and immunity. Under the lead ofregistered pharmaceutical distributors, all our staff recommended
nutritional drinks and other products to customers with anxiety
about new coronavirus infection and called for them to takeanti-infection measures. In addition, we reinforced our sales
promotional measures by analyzing customer data to provide
products, mainly in the fields of household ware, food, and sanitary
products, at prices which comply with customer needs. Accordingly,
we captured demand of customers who needed to stay home dueto the coronavirus pandemic.
At stores located in the suburbs, we continued our efforts
launched a few years ago. With the background of an increase inpeople’s awareness of good health amidst the coronavirus pan-demic, we strengthened the lineup of food items developed withthe concept of health or beauty, such as specific health food andfermented food. We also ensured that the sales section could handle many more items, including not only vegetables and other ingredients but also frozen food, such as frozen side dishes, noodles
and rice dishes, in order to accommodate customers’ wide rangeof needs, from cooking to meals. In urban areas, we are proceeding with the development of next-generation stores, for example,
by operating stores specializing in beauty items. At such stores, we
handle cosmetics that were not available before at drugstores andincorporate social media as a promotional and sales tool.
As a result of customers’ support of these efforts, we marked
net sales of 480.9 billion yen (110.9% of the previous year’s level).
Despite the severe market environment amidst the coronavirus pandemic, we increased our business results considerably.
Sales (merchandising of Sugi Pharmacy Co., Ltd.)

4,809(Unit: 100 million yen)
5,000
4,000

3,534

3,704

2016

2017

3,948

4,335

3,000
2,000
1,000
0

Amidst drastic changes in people’s lifestyles due to the coronavirus pandemic, we implement all possible anti-infection
measures, thereby underpinning customers’ and patients’ safeand healthy daily lives at the front line in local communities.
Shinya SugiuraManaging Director of Sugi Pharmacy

In FY 2020, the spread of the novel coronavirus infectious disease drastically changed people’s lifestyles. In this environment, toenable customers to shop at our stores without any worry, the SUGI
Pharmacy Group implemented all possible measures, such as ensuring the wearing of a mask by all employees, installing disinfectant
spray at store entrances, setting droplet prevention partitions on
checkout counters, and ensuring distance between customers waiting in a checkout line. With our employees providing service withkindness, we continued regular operations to the extent possible inorder to underpin customers’ and patients’ safe and healthy daily lives
at the front line of local communities.
In the merchandising business, there was a decrease in the salesof cosmetics due to no sales to inbound tourists mainly in stores located in urban areas and a decline in frequency of wearing and coveragewith makeup because of the establishment of the habit of wearing amask. At the same time, there was a considerable increase in the salesof masks, thermometers, and disinfection-related items purchasedfrom the perspective of anti-infection. In addition, as a result of a risein demand due to the pandemic requiring people to work from homeor stay home due to school closure, there was a growing need forfood items, leading to favorable merchandising results especially in
stores located in the suburbs.
In the prescription dispensing business, the number of prescriptions filled by us decreased due to the coronavirus pandemic making
people refrain from going out and requiring them to avoid the socalled 3Cs, leading to hesitation to go to medical institutions or theextension of prescription terms. Although the growth rate of sales ofthe prescription dispensing business became sluggish, we continued
two-digit growth amid the difficulties by establishing new prescription dispensing stores toward further expanding our prescription dispensing business.

2018

2019

2020

(FY)

Prescription Dispensing
We spent the past year ensuring that our pharmacists could
concentrate on providing patients with high-quality medication instruction by assigning medical office workers and proceeding with
automation for prescription dispensing services.
While medical office workers assume responsibilities ranging
from prescription acceptance and data entry to item picking andcheckout, pharmacists provide patients with medication instruction
during all that time. Although there used to be many complaints from
customers about their waiting time, such time has now become possible to be used more effectively. Moreover, to provide support for patients from the time of their consultation at medical institutions to thenext time, we focus on “prior counseling” at the time of our accepting prescriptions, “medication follow-up” during their time of taking medication, and “tracing reports” designed to provide obtained
feedback to doctors. By doing so, we are improving our function as a“family pharmacy.” Furthermore, we are increasing our presence inlocal communities by setting up stores focusing on home-visit services

through integration of cross-functional partnership, an even more efficient delivery system, and online medication instruction.
We have introduced kakari, an app (developed by MedPeer) withthe functions of sending prescriptions and searching for medicine andhealth consulting through chatting. In addition to increasing customers’ convenience, this introduction has enabled us to provide medication follow-up through pharmacists even if the patients are not at ourstores. We thus provide support so that patients can take medicine
without any worry.
Greatly affected by the coronavirus pandemic, FY 2020 saw adrastic decline in the number of prescriptions filled in the entire market of prescription dispensing services. Many patients refrained fromgoing to their medical institutions, while there was also a decline in
the number of flu patients. In the SUGI Pharmacy Group, we filled
10.10 million prescriptions, 102.7% of the previous year’s level, withsales in prescription dispensing services reaching 117.5 billion yen(111.7% of the previous year’s level).
Sales (prescription dispensing of Sugi Pharmacy Co., Ltd.)(Unit: 100 million yen)
1,200

1,052

1,000
800

754

841

1,175

910

600
400
200
0

2016

2017

2018

2019

2020

(FY)

23

24
Integrated Report 2021

Business Report (Sugi Pharmacy Co., Ltd.)STRATEGYOVERVIEWGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Market Environment
What is required in solving challenges, such as the aging and declining population and the need to slow the increase in medical care expenditures, is total healthcare covering self-care, elderly nursing support, and daily life
support focused on each customer. Drugstores overseas are undergoing accelerated digitalization in various forms,
while in Japan, the Ministry of Health, Labour and Welfare is promoting policies to reorganize all pharmacies into
“family pharmacies” by 2025.

Mega trend

Drugstore segment

Size of the drugstore
market*1

2.7 trillion yen in 2000 → 8.3 trillion yen in 2020 → 10 trillion yen in 2025 (estimate)

Population aged 65+ inJapan*2

22.04 million in 2000 → 33.87 million in 2015 → 39.21 million in 2040 (estimate)

Trend

Demand in the self-care category, such as maintenance and promotion of health and disease prevention, andthat in the life support category, such as meals and product sales for senior citizens, are increasing rapidly inaccordance with the progress in population aging. One of the few growing industries in the era of population
decrease.

Specific cases● Promotion of comprehensive

community care

Aging anddeclining
population● Better response to home-care

Online healthcounselingsupport needs● Change in purchasing behaviorof senior citizens

demand● Reduction in drug prices anddispensing fees
● Outcome evaluation (primaryprevention, health promotion,
prevention of aggravation)

Behavior change
support and healthpromotion programs

High-level
pharmaceuticalmanagement

digital assets● Promotion of 5G andenhancement of IoT● Unified and continued
management of medication
information supported by ICT(Digitalization)

e-commerce market● Rise in health consciousness● Change in consumer behavior

due to the COVID-19 pandemic(shopping in nearby areas for
short periods of time)

Medical care andmedication category

Walgreens, a major U.S.-based drugstore chain with over 9,000 stores nationwide, provides a comprehensive healthcare service focused on customers and patients by connecting physical stores and apps.
In addition to providing one-stop healthcare service at community-based physical stores, they launched an electronic marketplace of multiple telemedicine services
in July 2018, allowing users to select their preferred service at a single platform on

Product sales anddelivery of medical
supplies

Follow-up medication
management/Polypharmacy
prevention

Prescription
dispensing segment

External prescription rate
(Market size)

39% (2.7 trillion yen) in 2000 → 63% (6.1 trillion yen) in 2010 → 75% (7.7 trillion yen) in 2019*3

Size and share of the prescription
dispensing market for drugstores*4

Prescription dispensing amount: 1.07 trillion yen in 2020 (+9.0% YoY)
Prescription dispensing market share: 13.8% in 2019

Trend

In the prescription dispensing market, a shift from pharmacies located near medical institutions to drugstores
located in suburban areas is in progress following the Pharmacy Vision for Patients promoted by the Ministry of
Health, Labour and Welfare. An important segment supporting the growth of drugstores.

*1: “Fact-finding survey of drugstores in Japan” by the Japan Association of Chain Drug Stores*2: From materials of the National Institute of Population and Social Security Research*3: “Progress of separation of dispensing and prescribing functions (Trend in insurance dispensing)” by the Japan Pharmaceutical Association*4: Dorabizu on-line [Drugstore Association] Prescription dispensing at drugstores exceeds 1 trillion yen for the first time (Released April 16, 2021) https://www.dgs-on-line.com/
articles/877

Outline of the Pharmacy Vision for Patients
Accelerated digitalization in drugstores overseas

Home-visit prescription
dispensing

Online medication support/instruction● Rapid expansion of the

Change in
consumer
behavior

Delivery of health/
Health therapeutic meals
promotionapps

Prescription dispensing● Integration of physical andTechnologicalinnovation

Home-visit nursing

Elderly nursing support anddaily life support category

Self-care category● Rapid increase in self-care

Need to slow
the increase in
medical careexpenditures

Product sales

In 2015, the Ministry of Health, Labour and Welfare released the Vision to demonstrate the future vision of family
pharmacies toward realizing separation of dispensing andprescribing functions with the focus on patients, as wellas to indicate the course of action to reorganize current
pharmacies into family pharmacies from a medium- andlong-term perspective toward 2025, when baby boomers
reach the age of 75, and toward 2035, 10 years thereafter.

2015 The Ministry of Health, Labour and Welfare released thePharmacy Vision for Patients● Aiming to equip all pharmacies, including those located near medical
institutions, with the function of family pharmacy
2016 ● Themed pilot project to strengthen the function of family
pharmacist/pharmacy● Fact-finding survey, study of the roadmap
2025 All pharmacies to become “family pharmacies”● Use of ICT ● Family pharmacy + health support functions
2035 Demonstration of the family pharmacy function in daily living areas● Locations to be within the communities

the company’s app.
25

26
Integrated Report 2021

Market Environment

STRATEGYOVERVIEWGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Mid-Term Management Plan 2022
We have been pushing forward with our growth strategies under the slogans of “Consolidation of our foundationand framework for growth” since FY 2015 and “Aggressive management approach” since FY 2018. We are accelerating 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 the new three-year
mid-term management plan from FY 2020, which centers on “reinforcement of management with the focus on
customers’ lifetime value” and “promotion of digital transformation in management.”
Overview of the Mid-Term Management PlanFY 2020 – FY 2022 Enhancement of our corporate value by maximizing customers’ lifetime value

Growthstrategy

Reinforcementof themanagementfoundation● Reinforcing our operations in existing areas (opening stores, frequently-visited stores &1

Reinforcement of our sales power2

Reinforcement of management with the focus on
customers’ LTV*1 pp. 29–30● Proceeding with the Total Healthcare Strategy● Enhancing customers’ LTV by integrating our physical and digital assets

3

Expansion of cooperation and collaboration● Concluding alliances and M&A transactions (within or outside the industry)● Optimizing the entire value chain process through information sharing

4

Promotion of DX*2 in management pp. 31–32● Presenting new forms of customer experience through the use of digital technology● Optimizing our existing operations through the use of digital technology

5

Improvement of productivity

6● Opening new stores with high investment efficiency and renovating existing stores● Enhancing operational productivity (abolishing unnecessary tasks, employing part-time

Shimizuyama Store

Featured store ②

Shinjuku 3-chome Store

Connects patients in the community to better
healthcare as a store featuring a clinic

Developed into a beauty-focused store throughintegration of physical and digital assets

As one of the “pharmacies featuring medical malls or clinics” out of the three types of community healthcare stores,
SUGI Pharmacy Shimizuyama Store (Midori-ku, Nagoya) invited
Shimizuyama Skin Clinic (Director: Dr. Akinori Hayakawa, dermatologist) to the store’s premises. The clinic was opened adjacentto the store.
Patients at the clinic can visit Shimizuyama Store immediately
after receiving diagnosis and treatment to have their prescriptions
dispensed. In addition, as the store offers a number of hygiene
items for patients with skin diseases, such as gauze, they can
select items in accordance with their symptoms. Moreover, forthe many patients interested in beauty, the store provides substantial counseling services, including suggestion of supplements
and dietary guidance.

SUGI Pharmacy Shinjuku 3-chome Store boasts the great sizeof its area for beauty products among the SUGI Pharmacy Group. It
is one of the largest drugstores around the Shinjuku 3-chome area,
having two floors of sales space. The store’s greatest advantage ishaving a prescription dispensing pharmacy, in addition to the large
selection of health and beauty items. Customers can fulfill theirwishes to become healthier and more beautiful.
The store focuses on offering customer experiences through thecontact points featuring the integration of physical and digital assets.
It makes suggestions to customers according to their preferences
through the apps and adds to their interest using digital signage;
features a collaborative on-site shopping area allowing customers topurchase items of brands only available through one of Japan’s mostpopular cosmetic shopping apps NOIN (this is the first project as adrugstore); and organizes live events featuring Instagram.

workers, and proceeding with automation)

Reinforcement of human resources andorganizations

FY 2022 Quantitative target

experience-oriented stores, dispensing prescriptions)● Expanding into new growth areas (inbound tourists and overseas markets)

Featured store ①● Employing and training human resources to make our stores even more robust andfostering key players who will underpin the next generation● Making our organizations more streamlined and less hierarchical toward increasing our

productivity and expanding into new business fields● Net Sales ¥710.0 billion, Operating profit ¥37.0 billion(Profit margin 5.2%)*1 LTV: Lifetime value *2 DX: Digital transformation

Reinforcement of our sales power (Strategy for opening new stores)
Increasing regional shares by opening stores
aggressively, and making our stores even morecompetitive

1,391in total

We intend to push forward with strategic dominance in the areas of
Kanto, Chubu, Kansai, and Hokuriku. By the end of FY 2020, we have established 1,391 stores in total, featuring industry-leading regional shares in
the Chubu and Kansai areas. Many of the stores are prescription dispensing
drugstores in suburban areas focused on health and beauty items. However,
we have recently been proactively promoting the establishment of stores
focused on foods with enhanced convenience for consumers, stores in urban areas focused on beauty items, and stores featuring medical facilities.

Hokuriku:

Inagora Holdings Co., Ltd.

34

Kansai:

477
Kanto:

Chubu:

505

Establishing a prescription
dispensing and medical care
network by adopting three typesof community healthcare stores
We will proceed with a combination of the three
types of community healthcare stores: “pharmacies with the function of prescription dispensing,”“pharmacies featuring medical malls or clinics”
and “on-the-premises” pharmacies. While achieving cooperation with local medical institutions, we
are working to ensure that patient information isshared regardless of the type of pharmacy that thepatients use, and establish a network of prescription dispensing and medical care to underpin local
residents’ safe and secure daily lives.

Expansion of cooperation and collaboration

No. of stores As of the end of February 2021

375

“Pharmacies featuring
medical malls or clinics”
Reinforcing cooperation withmedical institutions from theperspective of local medical
infrastructure

Expanding the standard
model as an advantagethat we have maintainedsince our establishment

Mutual sharingof patient
information

Weibo

Redbook

WeChat Live stream

WechatReinforcement of human resources and organizations“Pharmacies withthe functionof prescription
dispensing”

A medical mall or clinic located ona store’s second floor or ina parking area

We collaborate with Inagora, whosebusiness includes the operation of Wandou,
one of the largest inbound/cross-border
e-commerce platforms featuring Japanese
items for Chinese customers. They are engaged in the business for Chinese people
planning to visit Japan through Chinesesocial media Weibo and Redbook, and thecross-border e-commerce business throughlive stream sales on WeChat, one of themost widely-used apps in China.

FY 2019 result: Nagoya University
Hospital Store“On-the-premises”
pharmacies

Reinforcing support for advanced
medical care as an importantbase connecting core hospitals
and local stores

The basic principle for our human resource strategy is:“To be a company that considers human resources as an
asset, and allows each employee to achieve growth, feel job
satisfaction, and continue working without worries.” Basedon this, we promote our human resources strategy with thethree pillars of “human resources development,” “securing
human resources,” and “reform in human resources management.” By fostering and protecting our employees as
an asset, we will realize our management philosophy andgrowth strategies.

Registeredsales clerks

NationallycertifiedPharmacists
dieticiansBeautyadvisers

Partner
employees

27

28
Integrated Report 2021

Mid-Term Management Plan 2022

STRATEGYOVERVIEWGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Lifetime Value

Reliable and conveniencedrugstore in the neighborhood

We provide support tailored to the health stage of each customer, from primary prevention and secondary prevention to medical treatment, elderly nursing care and terminal care, thereby establishing a lifelong relationship oftrust and underpinning their healthy, rich lifestyles and community healthcare.

I bought cosmetic products
for the first time.

Healthcare Expan-

I bought snacks at a favorite
store in my neighborhood.
I bought items for my baby.

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

Registered sales clerks

Period of communication with customers
SUGIsapo Walk

SUGIsapo Eats

SUGIsapo Deli

A pedometer app that allows
users to earn SUGIsapo Miles,
which can be exchanged with
SUGI Points

A diet recording app that allows
users to earn SUGIsapo Miles
just by taking photos of theirmeals

A meal delivery service under
the supervision of nationallycertified dieticians

Responding to healthcare needs
Nationallycertifieddieticians

Pharmacists

Home-visit prescription
dispensing pharmacists

Exchange with SUGI
PointsWe gather and offer various
information based on theneeds of each customer.

Redeeming the points forrewards is also available on
the app.

Home-visit nurses

Value creationfrom stores

Hosting seminars and events

Experience

Community space

DiabetesPrevention
Support Program

Oh! Tassha-juku

Introducing devices that inspire
new awarenessA three-month class on preventive care,
where participants can learn how to build
a body that requires no long-term care

An electronic prescription
notebook app on which you canregister your family pharmacy

Interest

Lifestyle-relatedDisease Risk
ReportContinuanceA wellness space where we provide
customers and patients with more detailed
counseling on meals and exercise andsuggest solutions.
Here we make commitments to people atvarious health stages through our experts,
such as pharmacists and nationallycertified dieticians, and a wide variety of
products and services.

SUGI Pharmacy app

Joint campaign withbusiness partners

In addition to in-store
prescription dispensing,
SUGI pharmacy provides
home-visit care; I enjoy
services provided athome, such as home-visit
prescription dispensing.

sion of needs in each category

Responding to daily life support needs
Beauty advisers

Digital contact point(Gateway to the services)

I consulted with apharmacist about mychild developing a sudden
fever; I am happy that
SUGI pharmacy in myneighborhood was open
until late at night.

I am worried about myhealth checkup results,
so I consulted about theprevention of lifestylerelated diseases and dietingand bought supplements
and health food.

Trust from customers

We will underpin customers’ healthy, rich lifestyles andcommunity healthcare.

Expansion*Produced by MedPeer, Inc.

29

30
Integrated Report 2021

Mid-Term Management Plan 2022/Lifetime ValueSTRATEGYOVERVIEWGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Promotion of DX* and Future Vision* Digital transformation

Through integration of the physical and digital assets, we will effectively provide services tailored to the lifestyle
habits and health challenges of each customer.

In-store communication

Online communication

More effective counseling supported by digital tools

Providing customer-oriented services anytime, anywhere

Based on the product purchase history and other information collected through digital tools,

Establishment of a relationship of trust with customers leads to their frequent visits, and makes it possible for us to

we will provide counseling tailored to the needs of each customer, thereby providing them with optimal value.

utilize accumulated data and contact points for in-store counseling services.

Counseling by experts

Digital tools

Counseling by experts

Digital tools

Family pharmacy support app kakari* Produced by MedPeer, Inc.

Pharmacists

Pharmacists

Personal cosmetics record

Beauty advisers

Skin analyzer

We provide appropriate counseling by using the productpurchase history gained from electronic record of cosmetics purchases and information gained from skin analyzers.

Expansion of in-store and online communication

Nationally certified dieticians

Product sales
Contributing to the streamliningof order placing, stock
control, and point redeeming
operations by introducing
portable information devices
and connecting them to various
systems

Achieving information sharing andproductivity improvement at thesame time by introducing an app
that allows users to refer to video
manuals and record files for store
operation anytime, anywhere
within the stores

Productivity improvement

Productivity improvement

Providing efficient, safe andsecure prescription dispensing
services by introducing picking
support systems and powder
medicine checking systems

It provides an AI-based calorie calculation service anda chat consultation by nationally certified dieticians.

through productivity improvement by DX

Prescription dispensing
Establishing anenvironment allowing
pharmacists to focus
on communication
with customers
by computerizing
the prescription
dispensing process

It helps follow-up by pharmacists after medicationand online medication instruction.

Providing new forms of customer experience

Providing new forms of customer experience

We provide medication
instruction of higher
quality, utilizing
diagnostic inference
based on the prescription
information from thenext-generation receipt
computer PHARLO.

31

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Integrated Report 2021

Mid-Term Management Plan 2022/Promotion of DX and Future Vision

STRATEGYOVERVIEWGROWTH FOUNDATIONDATA & PROFILE

Growth Strategies

Financial/Non-financial Highlights
Based on ensuring financial soundness, we implement “medium- to long-term improvement of ROE,” “continuousand stable return to shareholders,” and “investment for growth.” In addition, with a view to achieving sustainablegrowth, we also focus on support for the establishment of healthy local communities, eco-friendly initiatives withbusiness partners, establishment of a healthy working environment, contribution to the global environment, andreinforcement of corporate governance.
Financial index Net sales

6,025(100 million yen)
6,000

Financial index Operating income

Financial index Net assets/Equity ratio(100 million yen)
400

(100 million yen)
2,500

5,419
5,000
4,307

4,570

337

4,884

4,000

228

247

1,500

100
1,000

0

Equity ratio

258

2,000

2016

2017

2018

2019

2020 (FY)

0

2016

2017

Financial index Profit attributable to owners of parent

Financial index ROE(100 million yen)
300

（％）
12.0

207

200
149

164

211

2018

2019

2020 (FY)

11.9

10.9

11.0
10.5

179

1,827
64.5

63.8

62.7

1,487

1,620

1,665

58.2

2,006 80
58.0

500

20

2016

2017

2018

2019

2020 (FY)2019

2020 (FY)

287
259

236

0

100

0

2016

2017

2018

Financial index Dividend per share/Payout ratio

(Yen)
4,000

(Yen)
100

2,956
2,349

2,559

3,245

（％）
100
Dividend per share
Payout ratio

2,694
60

60

60

40

2016

2017

2018

2019

2020 (FY)

2016

2017

2018

2019

2020 (FY)

23.1

21.2

1,000

8.0

24.3

23.8

23.4

0

2016

2017

2018

2019

2020 (FY)

0

2016

2017

2018

2019

Financial index Total assets

Non-financial index No. of employees

No. of managers/
Non-financial index
非財務
Ratio of female managers

（％）
12.0

(100 million yen)
4,000

(Persons)
20,000(Persons)
2,500

18,177

3,459
11.0

10.6

10.7

10.9
10.5

10.7

3,000
2,306

2,654

10,000

2016

2017

2018

2019

2020 (FY)013,236

Partner
employees
7,722

7,973

14,252

8,758

10,282

2016

2017

2018

2019

2020 (FY)

0

313

2,000

11,467

5,000

1,000

9.0

Total
12,649No. of managers

1,500

2,000

10.0

8.0

2,539

15,0001,000

500

Full-time
employees
4,927

5,263

5,494

6,182

6,710

2016

2017

2018

2019

2020 (FY)02020 (FY)（％）
25
Ratio of female managers

16,46440

20

20

Financial index ROA

3,137

80

50

2,000

9.0

80

80

80
70

100

0

341

Financial index Net assets per share

11.0

10.0

336

200
40

0

300

60

1,000

3,000

10.6

(Yen)
400

Net assets

200

3,000

（％）
100

2,000

297

300

Financial index Net income per share

0

135
Women
9.9

156
10.8

178

228

15.6
15

13.6

11.6
10

Men
1,235

1,292

1,358

1,451

1,692

2016

2017

2018

2019

2020 (FY)* Number of partner employees converted into the number of 8-hour workers

33
Integrated Report 2021

20

5

0

34
Financial/Non-financial Highlights

OVERVIEWGROWTH FOUNDATIONSTRATEGYDATA & PROFILEFoundation for Growth

Priority Issues (Issues of Materiality)
As a corporate group closely related to the lives of people in local communities, the SUGI Pharmacy Group believes
that sustainable corporate growth will be achieved by solving social issues to contribute to the establishment of asustainable society and by sequentially realizing our management philosophy. In 2021, we reviewed our priority
issues (issues of materiality) and specified five themes.

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

Sustainability Basic Policy

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

Five themes and 16 priority issues (issues of materiality)● Improvement of access to reasonable and quality● Health education and support for patients in thehealthcare services● Ensured safety in medical care and proper managementof medical and pharmaceutical products● Improvement of convenience in everyday life andsupport for the community

community

Selection of priority issues

Consideration of
the order of priority

Feasibility confirmation

First, we clarified our challenges based on interviews with the heads of departments and directors
in charge as well as on opinions from external specialists. Then we renewed the priority issues basedon the guidelines on sustainability (GRI, SASB), theSDGs, ESG rankings, and the status of rival companies in and out of the country. In the renewal process, we took into consideration our management
philosophy and Sustainability Basic Policy.

We considered the orderof priority based on theopportunities, risks andmajor efforts for each issue from the perspectivesof economic value and social value, and created themateriality matrix.

After the board of directors reviewed the orderof priority, we finalized
the five themes and 16
priority issues (issues ofmateriality).

● Improvement of therapeutic effects for patients● Establishment of a robust society in terms of disaster risk

reduction and crime preventionHigh● Maintenance of productsafety and security● Contribution to rich lifestyles throughP39−40and enhanced information
security● Reinforcement ofcorporate
governance● Health education and support

products● Maintenance of product safety
and security
P41● Establishment of a
responsible supply
chain management
system● Personal information protection

HealthyCommunity

Contribution to
Local Communities
P45−52P42

reasonable and quality healthcare
servicesfor patients in the community● Ensured safety in medical care and● Realization of adecarbonized society● Reform to realize healthy andsafe working styles● Establishment of a robust society in

Importance for society

Sustainable
Business
Partnerships

Corporate
Governance● Improvement of access toterms of disaster risk reduction and crime
prevention● Personal information protectionand enhanced information
security

proper management of medical andpharmaceutical products● Improvement of convenience ineveryday life and support for thecommunity● Improvement of therapeutic● Contribution to rich lifestyles● Establishment of a responsible● Human resources development

effects for patients

supply chain management
systemthrough products● Reinforcement of corporate

Contribution to
the Global
Environment

Healthy Workplace
Environment

governance● Realization of a recycling-based society● Utilization of diverse humanresources

P43−44

Importance for the SUGI Pharmacy Group● Human resources development● Reform to realize healthy and safe working styles● Realization of a decarbonized society● Utilization of diverse human resources● Realization of a recycling-based society

High

35

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Integrated Report 2021

Priority Issues (Issues of Materiality)

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILEFoundation for Growth

Five themes and priority issues (issues of materiality)
Themes and issues of priority
Improvement of access to reasonable andquality healthcare services
Ensured safety in medical care and proper
management of medical and pharmaceuticalproducts
Healthy Community

Improvement of convenience in everyday lifeand support for the community
Health education and support for patients inthe community
Improvement of therapeutic effects forpatients
Establishment of a robust society in terms ofdisaster risk reduction and crime prevention

Sustainable Business
Partnerships

Contribution to rich lifestyles throughproducts

Opportunities and risks
Opportunity
Risk
Opportunity
Risk
Opportunity

Capturing growing markets● Increasing the number of stores with counseling

Customer retention by rival companies

function● Enhancing online services

Increase in customer satisfaction
Deterioration of brand value / Decrease in the number of patients
Capturing growing markets / Improvement in brand value

Risk
Opportunity
Risk
Opportunity

Customer retention by rival companies / Shrinking of the market
Increase in customer satisfaction
Customer retention by rival companies
Increase in customer satisfaction / Increase in dispensing fees

Risk

Reduction in dispensing fees

Opportunity

Improvement in brand value

Risk

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

Opportunity

Capturing growing markets / Improvement in brand value

Risk
Opportunity
Risk

Contribution to the
Global Environment

Realization of a decarbonized society

Opportunity

Improvement in brand value
Customer defection
Cost reduction / Improvement in brand value
Customer defection

Risk

Cost increase due to carbon taxes / Deterioration of brand value

Improvement in brand value / Cost reduction

Realization of a recycling-based society
Risk
Opportunity

Deterioration of brand value● Improving access to products and services

Healthy Workplace
Environment

Risk
Opportunity

Related SDGs
● Providing data-based healthcare services● Providing information on medical andpharmaceutical products using digital tools● Supporting activities by local communities

and organizations

for in-home patients● Providing more information to promote prevention● Supporting patients and their families

and care● Providing information to and raising awareness ofpatients and their families● Improving medication adherence by implementing

follow-up medication management● Improving therapeutic effects by preventing
polypharmacy● Establishing robust stores and infrastructure● Improving therapeutic effects by providing

information to medical institutions● Supporting disaster-affected people in local

communities● Providing health-conscious products● Focusing on the development of highvalue-added products● Establishing a product quality assurance system● Disclosing information appropriately● Managing supply chains appropriately● Focusing on the development of ethicalproducts● Promoting smooth communication with

suppliers● Shifting to renewable energy● Reducing greenhouse gas emissions● Reducing environmental burden throughthe entire life cycle● Promoting store development aimed at conserving

water resources● Promoting recycling through the cooperation of

manufacturing, distribution and sales sectors

Inspired innovation● Improving capacity development training for

Deterioration of competitivenessemployees● Shifting to a job-focused human resources system

Enhanced recruiting capability / Inspired innovation● Promoting health and productivity management

Human resources development● Proactively providing fields andopportunities for demonstrating abilities● Promoting work-style reforms● Promoting establishment of a workplace

Risk
Opportunity

Employees leaving the company / Deterioration of brand value
Accelerated store launch / Inspired innovation

Utilization of diverse human resources
Risk

Corporate
Governance

Personal information protection andenhanced information security

training and infrastructure development● Safely collecting medical and pharmaceuticalproducts and medical equipment

Rival companies capturing growing markets

Risk

Opportunity

Reform to realize healthy and safe working
styles● Collecting near-miss cases and sharing them for● Enhancing medical and elderly nursing-care services

Maintenance of product safety and security

Establishment of a responsible supply chain
management system

Major efforts

Opportunity
Risk
Opportunity

Reinforcement of corporate governanceRisk

environment in consideration of employees’ safety● Preparing fields and opportunities with a focus ondiversity

Occurrence of risks in business continuity / Deterioration of
corporate value
Improvement in corporate value
Occurrence of risks to business continuity / Deterioration of
corporate value

working styles● Fostering a corporate culture that respect

Slowing store launch / Deterioration of brand value
Improvement in corporate value● Developing systems that support diverse

diversity● Strengthening efforts for personal information

protection and providing thorough training● Improving board effectiveness● Providing thorough compliance training● Strengthening the information security

system and providing thorough training● Strengthening the risk management

system37

38
Integrated Report 2021

Priority Issues (Issues of Materiality)

OVERVIEW

STRATEGY

Priority Issues (Issues of Materiality)

GROWTH FOUNDATIONDATA & PROFILEFoundation for Growth

Healthy Community

Health education and support for patients in the community

Since the company’s establishment, we have developed the drugstore model of “pharmacies with thefunction of prescription dispensing” aimed at contributing to local communities, ahead of our rivals.
At present, we have evolved it into a new business model covering self-care, elderly nursing care andterminal care based on our Total Healthcare Strategy.

● Providing healthcare seminars by pharmacists● Providing specific health guidance at stores in local

communities

No. ofrecipients in FY 2020

2,623
persons+214%

Improvement of access to reasonable and quality healthcare services● Increasing the number of stores with counseling function

In this era of digitalization, the importance of counselingby experts at physical stores is increasing. The SUGI Pharmacy
Group is now working to integrate the records of customers
and patients, including product purchase information, counseling history, and lifestyle-related records obtained throughour apps, including the number of daily steps and meals. Using
this information, we are striving to increase the number ofstores that can provide satisfactory counseling services basedon the needs and issues of each person.

dispensing and increase the number of stores providing theservice. Thus we will proceed on the development of local alliance pharmacies, which can share detailed information withmedical institutions at the time of patients’ admission anddischarge and can serve as a local healthcare hub to provide
comprehensive support in the phases of elderly nursing careand terminal care.
We will also make efforts to serve as “pharmacies alliedwith specialized medical institutions” with high-level pharmaceutical management functions that provide training for specialized pharmacists in the field of oncology and work in close
cooperation with medical institutions providing specialized
medical services.
● Enhancement of the digital membership base

● Serving as “local alliance pharmacies” and “pharma-cies allied with specialized medical institutions”
We will focus on serving as “local alliance pharmacies”
and “pharmacies allied with specialized medical institutions,”
both of which will be promoted as a national initiative.
As the SUGI Pharmacy Group has focused on the home-visit
prescription dispensing service ahead of its rivals, we will utilize the accumulated know-how on home-visit prescription

The number of our digital app members (SUGI Pharmacy
app, SUGIsapo Walk, SUGIsapo Eats, kakari (by MedPeer, Inc.))
is the base for a variety of digitalized healthcare services andsales promotion tailored to individual needs. In FY 2020, we
focused on the promotion of each app and achieved 7.72
million downloads. With the goal of a total of 15 million
downloads of our digital apps (by the end of FY 2023), we will
enhance our digitalized healthcare services and sales promotion tailored to individual needs.

Ensured safety in medical care and proper management of medical and pharmaceutical products● Introducing error prevention systems in prescription dispensing

We have installed picking support systems and powder medicine checking systems at all of our stores that provide prescription
dispensing service, and will make sure that all new stores will havethe same systems. Moreover, by proceeding with the introductionof one dose package checking systems, we will support pharmacists in concentrating on communication with customers and establish a safe pharmaceutical environment.

work underpinning the comprehensive community care system“Helping local residents maintain their own lifestyles in familiar surroundings” is the basic concept of the comprehensive community care system. To
achieve this, we have provided home-visit prescription dispensing, home-visit
nursing, and life support (product sales and meal support) services to in-homepatients. In particular, we aim at providing home-visit prescription dispensing service by pharmacists (the service we pioneered in the industry) to a yearly total of
250,000 people by 2025, along with home-visit nursing and life support services.

● Supporting children with intractable diseases andStudy meeting for medical and nursing
care personnel in the community

Study meeting for local residents

their families

Online session in the COVID-19 pandemic

Improvement of therapeutic effects for patients● Implementing follow-up medication management● Strengthening cooperative framework to preventand providing information to medical institutions
By adopting preliminary counseling (providing medication
instruction to patients when they present prescriptions at thecounter), we aim to encourage pharmacists to concentrate oncommunication with customers, which is their primary role.
In addition to detailed instruction to patients at the store,
pharmacists also provide follow-up medication management
service via smartphones after the patients return home andtake the drugs, thereby dealing with their problems anytime,
anywhere. In addition, we are making efforts to maximize thetherapeutic effects by providing information on the medication status of patients to medical institutions through the tracing reports.

polypharmacy
Polypharmacy (multiple medication use causing harmful
effects) is a social issue primarily related to senior citizens.
To prevent this, we are undertaking joint research with the
National Center for Geriatrics and Gerontology on an operation model featuring enhanced cooperation between doctors
and pharmacists at hospitals and pharmacists at pharmacies.
We are working to eliminate polypharmacy by encouraging
smooth cooperation between doctors and pharmacists at hospitals and pharmacists at pharmacies after patients’ discharge(which is usually difficult), thereby increasing the effectivenessand safety of the medical therapy.

Establishment of a robust society in terms of disaster risk reduction and crime prevention● Installing AEDs at many more of our stores

We are proceeding with the installation of AEDs primarily at stores witha high risk of accidents involving senior citizens and those located in regions
where the local governments request us to do so.
AEDs are installed at 130 stores (approx. 10% of the total) as of the endof February 2021 and we are planning to increase the rate to 20% by the endof FY 2025.

Improvement of convenience in everyday life and support for the community● Home-visit prescription dispensing and nursing services as a frame-

YoY

Status of home-visit prescription dispensing andhome-visit nursing service provision (as of February 2021)
Home-visit No. of service storesprescription No. of users (monthly average)
dispensing No. of users (yearly total)
No. of service centers

Home-visit
No. of users (monthly average)
nursing
No. of users (yearly total)

Concluded a comprehensive agreement with Aichi Prefecture on theachievement of “regional revitalization SDGs” (March 24, 2021)

541● Supporting local disaster risk reduction efforts by local communities

12,233We are implementing various initiatives to solve challenges of local communities by concluding comprehensive agreements with local governments.
Regarding disaster response and disaster risk reduction, we are planning toprovide support by offering disaster relief goods, offer evacuation areas andsupplies at the stores for stranded commuters in an emergency, and cooperatewith the local communities in implementing disaster drills.

146,794
13
1,216
14,590Contribution to the enhancement ofcommunity safety and security

Achievements
by FY 2020

Total number of agreements

53

Comprehensive agreements

13

Agreements on services not covered by health insurance

2

Watching-over agreements

9

Disaster risk reduction agreements

29

39

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Integrated Report 2021

Priority Issues (Issues of Materiality)

OVERVIEWGROWTH FOUNDATIONSTRATEGY

Priority Issues (Issues of Materiality)

DATA & PROFILEFoundation for Growth

Contribution to the Global
Environment

Sustainable Business Partnerships
We will develop systems and promote initiatives to fulfill our responsibilities for the entire supply chain.
Moreover, through the procurement and development of safe and secure products, we will contribute to therich lifestyles of people in local communities. By sharing information and strengthening cooperation among
manufacturing, distribution and sales sectors, we will promote streamlining of the entire supply chain, suchas reduction of product returns and disposal and new product development based on the data of each.

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

Contribution to rich lifestyles through products● Focusing on the development of high value-added

products
We are proceeding with the enhancement and update of
the product lineup of our private brand featuring the three
categories of royal, middle and basic. In particular, we focus on
the development of high quality and high value-added products. In the royal category, we will proactively promote theTwo kinds of horse placenta extracts with excellent health- andbeauty-promoting effects, which are used for various supplements
and beauty care products, are abundantly contained in this product:
50,000 mg* per bottle.
The pleasant flavor of La France Pear helps you continue to drink it.
This is recommended for you if you wish to lead a vibrant life or areinterested in beauty care from inside of your body.

development of makeup and skincare items as well as products that satisfy the needs of customers suffering from sleep
disorder amid the COVID-19 pandemic, and those sufferingfrom high blood pressure, elevated blood sugar, and musculoskeletal deterioration reducing locomotive ability in the aging
society. We will also develop products to enhance inner beauty, supporting users’ beauty from inside of their body.
Getting beautiful skin is the wish of all women. Our original skincare brand series Prieclat, developed to make your skin moisturized, clear and firm, has sold 300,000 bottles in a year after the
product launch. In FY 2020, we released the rich beauty cream“Cream W” that contains Nano Fiber Gel®.

* Horse placenta extract 20,000 mg, concentrated powder of fermented andaged placenta extract 150 mg (equivalent to 30,000 mg of fermented and aged
placenta extract)

Realization of a decarbonized society
In FY 2021, we will reinforce our efforts to realize a decarbonized society.
We will visualize our CO2 emissions and formulate a plan
based thereon so that we can reduce our CO2 emissions
in stages every year. We consider formulating medium- tolong-term goals while observing administrative trends.
● Reducing greenhouse gas emissions and power con-sumption (energy saving)
At our stores, headquarters and offices, we strive to reduce power consumption mainly through careful temperature control, air-conditioner cleaning on a regular basis, andchanging lighting-up hours. In addition, we are proceedingwith the replacement of conventional lighting with LEDs at
all of our stores.
Stores with LED lighting(No. of stores)
1,500
1,200

72

81

97％

Maintenance of product safety and security● Establishing a product quality assurance system● Increasing the lineup of eco-friendly* and community-

In FY 2020, we started reviewing the specifications ofour private brand products to develop and increase sales ofsafe and quality products. In FY 2021, we will improve therate of compliance with specifications in cooperation withour business partners.

and society-oriented products
In FY 2021, we will start the development of an eco-friendly
private brand. Materials are selected from those contributing
to environmental conservation. We will also make efforts toacquire certification of various kinds. From now on, we will
strive to increase the ratio of eco-friendly products to the entire
private brand products.

* We are planning to achieve eco-friendliness by using FSC certified paper, biomass plastic, vegetable ink, etc.

Establishment of a responsible supply chain management system● Managing supply chains appropriately

To achieve coexistence and co-prosperity with our business partners and address various social challenges, wehold briefing sessions to explain annual policies and plansof the SUGI Pharmacy Group to our business partners. By
promoting their understanding and cooperation, we expect to receive their support for our business, such as the
improvement of products and services and streamlining ofoperations, and advance environmental conservation andother initiatives to realize a sustainable society.

60

1,004

1,126

300
0

2018

2019

We will consider introducing a solar panel-based power
generation system into stores to encourage the shift to renewable energy.
● Disclosing information appropriately

We will advance appropriate information disclosure using the TCFD* framework.

Governance

We will establish a sustainability committee
led by the President, regularly report the initiatives and outcomes to the board of directors, and develop a monitoring system by theboard of directors.

Strategy

To assess the impact of climate change on
our operations, we will start scenario analysis
and conduct impact evaluation of significant
risks and opportunities.

Risk
management

We will break down our business activities,
estimate the financial impact of each, anddevelop countermeasures.

Indices andgoals

We will develop indices for evaluating risks
and opportunities, and assess the progress
toward the goals.

80

900
600

（％）
100

● Shifting to renewable energy

1,353
2020

40

* Task Force on Climate-related Financial Disclosures

20
0
(FY)

Realization of a recycling-based society
We are taking environmental measures through theefforts of reduction, reuse, and recycling (of waste) at ourstores, headquarters and logistics centers. In addition, we
started the efforts of “refusing” the things that may produce waste.
● Reducing the amount of waste through the cooper-

ation of manufacturing, distribution and sales sectors
In FY 2021, we will work with our business partners topromote proper inventory management, reduction of product returns, improvement of accuracy in placing orders (including training for store staff), and review of the selling
price of almost expired products, thereby strengthening ourefforts throughout the entire supply chain to reduce theamount of waste per store.

● Reducing the use of plastic

Since July 2020, we have charged for plastic checkoutbags and also made efforts to introduce plastic bags containing biomass materials.
No. and weight of used checkout bags
FY 2019

FY 2020

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

262

144

Weight of used bags
(unit: ton)

2,000

1,100

Rate of customers refusing
checkout bags
From July 2020 onwards

74.6%

Nearlyhalved41

42Integrated Report 2021

Priority Issues (Issues of Materiality)

OVERVIEWGROWTH FOUNDATIONSTRATEGY

Priority Issues (Issues of Materiality)

DATA & PROFILEFoundation for Growth

Healthy Workplace Environment
Considering employees as an important asset that supports the company and improves our corporate
value, we are developing systems to ensure diverse careers and working styles, creating a workplaceenvironment where employees can work healthily and happily, and fostering a corporate culture
accepting human resources with diverse backgrounds.

Human resources development● Improving capacity development training for

employees
We clarify the “required skills” for each task and role aswell as for in-house certification, and provide training for
employees to obtain such skills and demonstrate them onsite. We will increase the average time of training provided
to each employee to promote human resources development.

Utilization of diverse human resources● Preparing fields and opportunities with a focus on diversity

We are strengthening our efforts for human resources development and improvement of the workplace environment so as to increase the ratio of female
managers to 30% by the end of FY 2029. Regarding human resources development, we train employees to obtain and practice the skills to discover and resolve
essential challenges, communication and leadership skills, knowledge on products, specialized and managerial knowledge, and technical skills. Regarding theimprovement of the workplace environment, we focus on improving the benefits
package and encouraging each employee to present their opinions to the company, thereby reinforcing support for employees. We will also promote work-stylereforms to support a better work-life balance.
—Comprehensive parenting support—● Shifting to a job-focused human resources system

6 weeks before childbirth

To train the management team, we have started reforms of the human resources system for managers. We aremaking a shift to the job-focused evaluation system, underwhich evaluations are made based on the level of achievement of required roles.

Until April 30 following
the child’s second birthday

Until the child completes
third grade at elementary
schoolUntil the child completes
his/her elementary school
programMaternity leave
Until the day
preceding thechild’s firstbirthdaySpecial leave forspousal childbirth

Reform to realize healthy and safe working styles—Certified as a Platinum Kurumin company—
SUGI Pharmacy is the first in the drugstore industry to
be certified as a Platinum Kurumin business operator. Thiscertification is granted to general employers that conformto the designated standards regarding parenting support.
In FY 2020, 697 employees (651 women and 46 men) tookparenting leave, with the percentage of those returning towork after their leave reaching 94%.

Days off: Can select “Saturdays, Sundays and national holidays”
Working hours: Starting time and ending time can be fixed.
Commuting time: Commuting time of less than 60 minutes eachway is ensured through change in assignment.
Extensionof parenting
leave

Parenting leave
Exceeding thestatutory standards● Promoting health and productivity management—Certified again in 2021 as an outstanding enterprisein terms of health and productivity management—
The SUGI Pharmacy Group was certified as a 2021 outstanding enterprise (in the large-enterprise division) in termsof health and productivity management. We were selected as such jointly by the Ministry of Economy, Trade andIndustry and Nippon Kenko Kaigi, in recognition of our strategic efforts concerning health and productivity management, based on the stance of viewing the enhancement of
employees’ health as a management issue.
Aiming to enhance employees’ health literacy and support their active efforts for health improvement, we are encouraging those who are likely to develop lifestyle-relateddiseases in the future to improve their lifestyle habits to prevent diabetes and other such diseases.
Moreover, we will make efforts to further increase therate of full-time employees who have undergone specifichealth guidance by FY 2023.

8 weeks after childbirth

Fixed working conditions for parenting

Working-hour reduction for parenting

Leave for child nursing (Seven days per year; 14 days per year in the case of two or more children)—SUGI Smile’s efforts—
Twelve in-house job coaches and 29 career counselors
provide operational guidance and daily support to 370 employees with disabilities working at seven offices nationwide. At stores, these employees do cleaning and arrange
products onto shelves, while at our headquarters, they sort
mail, do cleaning, and ship products to support logistics.
Percentage of employees with disabilities (FY 2020)

2.36%

43

44
Integrated Report 2021

Priority Issues (Issues of Materiality)

OVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILEFoundation for Growth

Corporate Governance

Career Summary and Reasons for Appointment of Directors (As of May 19, 2021)

To become a company required by society, the Company has been working on achieving sustainablegrowth and the improvement of medium- to long-term corporate value in collaboration with our
stakeholders. To that end, we continue to strengthen our corporate governance by improving thesoundness and transparency of management.

The Board of Directors consists of diverse directors in termsof backgrounds such as expertise, experience and gender. The
number of directors is maintained at an appropriate level inaccordance with the provision of the Articles of Incorporation
to fully perform the function of the Board of Directors mosteffectively and efficiently from the following viewpoints.
(1) Sufficient diversity should be secured to conduct decision-making and supervision of management.
(2) Discussions including concerns raised by the Independent
External Directors at the Board of Directors’ meetings
should be activated.
In principle, not less than one-third of the Directors are
Independent External Directors in order to make use of theirabundant experience and expertise outside the Company forthe management of the Company, and at the same time tostrengthen the supervisory function of the Board of Directors
and improve the transparency of management.
Number of Directors

6

Number of External Directors

3

Number of External Directors appointed as
independent directors

3● Composition of the Board of Auditors

The number of auditors is as provided for in the Articles
of Incorporation, and a majority of auditors shall be external
auditors. Persons with the insight, a high level of ethics, objectivity and integrity required for auditors will be appointed.
In particular, one or more persons with expertise in finance,accounting and legal matters will be selected.
Number of auditors

3

Number of External Auditors

3

Number of External Auditors appointed as
independent officers

3● Roles of the Board of Directors

The Board of Directors performs its supervisory functions
by realizing highly effective corporate governance. In addition,
it pursues the sustainable growth of corporate value by making the best decisions using objective judgment and appropriately exercising its authority.
(1) The Board of Directors makes important managerial decisions inaccordance with laws, ordinances, the Articles of Incorporationand internal rules, and supervises business execution.

Representative
Director &Chairperson
Date of birth:
August 14, 1956

Board of Directors / Board of Auditors● Composition of the Board of Directors

Eiichi
Sakakibara(2) Upon precisely understanding the cost of capital of theCompany, the Board of Directors formulates management
strategies and management plans taking into consideration the management philosophy and changes in the external environment. The outline will be disclosed. As forthe formulated management strategies and management
plans, the Board of Directors annually checks and analyzes
the status of progress, reviews the business portfolio, andrevises, as needed, the management resources distributionplans including new investments, establishment of newstores, system investments, and investments in human resources development.
(3) The Board of Directors proactively commits itself to finding
capable directors and top management in subsidiaries, andformulating and operating an educational program aiming to cultivate human resources. Furthermore, based on
the management philosophy and management strategies,
the Board of Directors appropriately supervises the content
of the same program, and subsequent allocation and appointment of the participants in the program.
(4) The Board of Directors delegates its decision-making to theRepresentative Director in terms of business execution ofmatters other than those to be decided by the Board of
Directors in accordance with laws, ordinances, the Articles
of Incorporation and internal rules.
(5) Directors and Auditors shall secure an 80% or higher attendance rate of Board of Directors’ meetings.

Katsunori
SugiuraRepresentative
Director & President
Date of birth:
October 14, 1978

ShinyaSugiuraDirector
Date of birth:
November 30, 1979

Shigeyuki
KaminoExternal Director
Date of birth:
May 23, 1947

Mr. Katsunori Sugiura, as Representative Directorof Sugi Pharmacy Co., Ltd., has been involved inmanagement, and has extensive experience andprofound insights in group management. He
has fulfilled his responsibilities by implementing
business development and development of business collaboration, overseas projects, DX (digitaltransformation), and ESG to realize the “total
health care strategy” that is the business strategy of the Group. Based on the above, we havejudged that he is the person who is appropriate
for executive officer of the Group, which is aiming for the sustainable increase of corporate value, and thus reappointed him as Director.

Joined the Company
Director and General Manager, Home Healthcare
Sales Division. Sugi Pharmacy Co., Ltd.
Director, SUGI Medical Co., Ltd.
Managing Director, Sugi Pharmacy Co., Ltd. (todate)
Director, SUGI Holdings Co., Ltd. (to date)Representative Director & President,
SUGI Medical Co., Ltd. (to date)

Mr. Shinya Sugiura, as Managing Director of Sugi
Pharmacy Co., Ltd. and Representative Director& President of SUGI Medical Co., Ltd., has professional insights in medical, living-related service andproduct sales, and has fulfilled his responsibilities
through reinforcement of the pharmaceutical business, which is the core business of the Group, cooperation in community-based health care and growing the revenue base of the drug store business.
Based on the above, we have judged that he is the
person who is appropriate for exercising leadership over the business development of the Group,
which is aiming for the sustainable increase of corporate value, and thus reappointed him as Director.

Joined Nagoya Railroad Co., Ltd.
Representative Director, Mie Sangyo Co., Ltd. (todate)
Representative Director & Senior Vice President,
Nagoya Railroad Co., Ltd.
Representative Director & President,
MEITETSU Department Store Co., Ltd.
Chairperson, Chubu Department Store
Association
Director, SUGI Holdings Co., Ltd. (to date)

Mr. Shigeyuki Kamino has been involved in the
management of other companies for many
years. Based on his abundant experience in, andknowledge of, management, he has actively
made remarks and recommendations during deliberations of the Board of Directors’ meetings,
and has also served as Chair of the Nominating/
Remuneration Committee. We expect from Mr.
Kamino appropriate supervision and advice froma broad perspective based on his profound insights and supervisory capabilities relating to corporate management, and thus reappointed him
as External Director.

Joined The Fuji Bank, Limited. (currently, Mizuho
Bank, Ltd.)
Registered as a Certified Public Accountant
Representative, Yoshiko Hayama Certified Public
Accountant Office (to date)Director, SUGI Holdings Co., Ltd. (to date)
Fellow Member, The Japanese Institute ofCertified Public Accountants (to date)
External Director, COCO’S JAPAN CO., Ltd.
External Director, Adastria Co., Ltd. (to date)
External Director, Dynac Holdings Corporation(Member of the Audit and Supervisory
Committee) (to date)
External Director, Zensho Holdings Co., Ltd. (to date)Ms. Yoshiko Hayama has abundant experienceand professional knowledge developed byserving as a certified public accountant, and an
external director and external auditor of listedcompanies. She has also actively made remarks
and recommendations during deliberations of
the Board of Directors’ meetings. We expectfrom Ms. Hayama high levels of expertise interms of business management and appropriate
supervision and advice from the viewpoint of an
independent officer, and thus reappointed her as
External Director.

Drug Information Office, Faculty of Pharmacy,
Meijo University
February 1980: Drug Information Office, Faculty of PharmaScience, Teikyo University
Executive Director, Japan Pharmaceutical Association
April 1998:
May 1998:
Director, SIC Co., Ltd. (to date)
April 2002:
Member of the Board, The Japanese ClinicalNutrition Association (to date)
September 2007: Director, Pharmaceutical Research Institute,Japan Pharmaceutical Training Center (to date)
September 2015: Chairperson, Japan Ladies Independent Pharmacy
Association (JLIPA) (to date)
May 2020:
Director, SUGI Holdings Co., Ltd. (to date)Ms. Michiko Hori has a high level of professional knowledge in the medical field and extensive
management experience at another company
that provides medical information, also serving
as a director at various institutions. She has also
actively made remarks and recommendations
during deliberations of the Board of Directors’
meetings. We expect from Ms. Hori appropriate
supervision and advice based on her profoundinsights into corporate management and highlevel of expertise in the medical field, and thus
reappointed her as External Director.

March 2017:
May 2018:
May 2021:

April 2004:
March 2010:
March 2011:
March 2017:
May 2017:
May 2021:

June 2008:
April 2009:
May 2012:
May 2015:
April 1983:
March 1994:
January 2015:

YoshikoHayamaExternal Director
Date of birth:
October 7, 1959

Mr. Eiichi Sakakibara has extensive experienceand profound insights regarding group management and the drugstore industry, and has
fulfilled his responsibilities such as management
restructuring including reinforcement of corporate governance as well as implementing reinforcement of the revenue base of the pharmacy
business and drug store business, which are thecore businesses. Based on the above, we havejudged that he is the person most appropriate for
implementing the corporate philosophy whichis the sustainable increase of corporate value
as well as management of the Group, and thus
reappointed him as Director.

Joined the Company
Managing Director, Sugi Pharmacy Co., Ltd.
Representative Director & President, SUGI Smile
Co., Ltd. (to date)Representative Director & President,
Sugi Pharmacy Co., Ltd. (to date)Representative Director & Senior Vice President
Representative Director & President,
SUGI Holdings Co., Ltd. (to date)Director, SUGI Medical Co., Ltd. (to date)

March 2006:
March 2011:
March 2014:

April 1970:
May 2007:● Roles of the Board of Auditors

As an organization independent from the management
team, the Board of Auditors performs audits concerning the
Directors’ business execution, the internal control system,
accounting and other matters.
(1) The Board of Auditors prepares a standard for appropriate evaluation of the accounting auditor. On an annual
basis, the independence and expertise of the accounting auditor is evaluated based on the said standard, anddecides the details of the proposal for the general meeting of shareholders in terms of appointment or dismissalof the accounting auditor.
(2) The Board of Auditors secures sufficient cooperation
with External Directors so that they can smoothly collectinformation by maintaining their independence.
(3) The Board of Auditors collects necessary and sufficient
information to perform appropriate audits by securing cooperation with the Internal Audit Department,
Finance and Accounting Department, Legal Department
and other related departments.

September 1986: Joined the Company
September 2008: Managing Director, Sugi Pharmacy Co., Ltd.
March 2011:
Representative Director & President,
Sugi Pharmacy Co., Ltd.
March 2017:
Representative Director & Chairperson,
Sugi Pharmacy Co., Ltd. (to date)
May 2017:
Representative Director & President,
SUGI Holdings Co., Ltd.
May 2021:
Representative Director & Chairperson,
SUGI Holdings Co., Ltd. (to date)

May 2016:
August 2016:
June 2017:
May 2018:
March 2020:

June 2020:
April 1977:

Michiko Hori
External Director
Date of birth:
February 19, 1954

45

46
Integrated Report 2021

Corporate GovernanceOVERVIEWGROWTH FOUNDATIONSTRATEGYDATA & PROFILEFoundation for Growth

Career Summary and Reasons for Appointment of Auditors (As of May 19, 2021)
October 2001:

Toshihiko
Sakamoto

June 2006:
June 2009:

External Auditor
Date of birth:
October 25, 1946

May 2012:
March 2017:
May 2017:

Mr. Toshihiko Sakamoto has been involvedin business management at other companies, and has abundant experience in, andknowledge of, management. Furthermore,
he took office as a full-time Auditor of
the Company in May 2012, and is familiar
with the business of the Company. We
have judged that he is capable of strictly
auditing the Company’s business from an
objective viewpoint by applying his profound insights concerning corporate management and knowledge of the overallmanagement of the Company, and thus
reappointed him as External Auditor.

General Manager, Finance and General Affairs Division,
Nagoya Branch, ITOCHU Corporation
Representative Director & President, C&S Co., Ltd.
Senior Managing Director in charge of human resources,finance and accounting and information systems,
ITOCHU Sugar Co., Ltd.
Auditor, SUGI Holdings Co., Ltd.
Auditor, Sugi Pharmacy Co., Ltd. (to date)
Full-time Auditor, SUGI Holdings Co., Ltd. (to date)

October 1993:

Kana Yasuda
External Auditor
Date of birth:
April 10, 1969

Joined KPMG Century Audit Corporation (currently, Ernst &Young ShinNihon LLC)
April 1997:
Registered as a Certified Public Accountant
March 2000:
Established Yasuda Tax & Accountant Office, Director (to date)
March 2004:
Registered as a Certified Public Tax Accountant
September 2009: External Auditor, Simpo Co., Ltd. (to date)
May 2010:
Auditor, SUGI Holdings Co., Ltd. (to date)June 2016:
External Director, GEO HOLDINGS CORPORATION (to date)June 2019:
External Director, Chuo Spring Co., Ltd. (to date)June 2020:
External Director (Member of Audit and Supervisory
Committee), KONDOTEC INC. (to date)August 1988:
March 1993:
May 2002:
April 2004:

MakotoKamiyaExternal Auditor
Date of birth:January 7, 1964

October 2005:
July 2007:
May 2020:
May 2020:
May 2020:
June 2020:

Joined Tohmatsu & Co. (currently, Deloitte Touche Tohmatsu LLC)
Registered as a Certified Public Accountant
Partner, Tohmatsu & Co. (currently, Deloitte Touche Tohmatsu LLC)
Registered as a Certified Public Tax Accountant
Partner, Tohmatsu Tax Co. (currently, Deloitte Tohmatsu Tax Co.)
Representative Partner, Tohmatsu Tax Co. (currently, Deloitte
Tohmatsu Tax Co.)Managing Partner of Nagoya Office, Tohmatsu Tax Co.
(currently, Deloitte Tohmatsu Tax Co.)
Director, Kamiya Makoto Certified Public Accountant,Certified Public Tax Accountant Office (to date)
Auditor, SUGI Holdings Co., Ltd. (to date)
Auditor, Mizkan Asset Co., Ltd. (to date)
Auditor, Yamazaki Mazak Capital Co., Ltd. (to date)

Ms. Kana Yasuda has engaged in awide range of business fields including accounting audit for businesscorporations as a certified public
accountant and a certified public
tax accountant, also serving as external auditor and external director
for listed companies, etc. We haveappointed Ms. Yasuda as External
Auditor, expecting from her strict
auditing based on her professional
insights into accounting and taxation,
and abundant experience.

Mr. Makoto Kamiya has professional knowledge and abundant
experience developed as a certified public accountant and certified public tax accountant. We
have judged that he is capable ofappropriately fulfilling the duties
of External Auditor by applying ahigh level of expertise and from his
independent standpoint, and thus
appointed him as External Auditor.

Skills Matrix● Remuneration System for Directors and Auditors● Nomination and Remuneration Committee

Under the remuneration system for Directors and Auditors,
basic amounts are fixed for each title and position using remuneration data and materials disclosed by specialized external organizations while considering the remuneration levelsof same-industry and same-size companies. The compositionof the remuneration varies depending on whether Internal
Director, External Director or Auditor.

As an advisory organization of the Board of Directors,
we established a voluntary Nomination and Remuneration
Committee, a majority of which is composed of external officers (External Directors and External Auditors).
The remuneration for Directors is decided by the
Representative Director who is delegated by the Board of
Directors following the deliberation of the Nomination andRemuneration Committee within the limit of the remuneration
amount as resolved by the general meeting of shareholders.
The remuneration for Auditors is decided in the discussion
by the Board of Auditors following the deliberation of theNomination and Remuneration Committee within the limit of
the remuneration amount as resolved by the general meetingof shareholders.

● Structure percentage of basic compensation andperformance-linked compensation
The remuneration for Directors consists of basic compensation (fixed) and performance-linked compensation in which
the contribution to the increase in corporate value by achieving the business target is considered.
The remuneration for External Directors and Auditors is
composed only of basic compensation (fixed) from the viewpoint of their roles and independency.
The structure percentage of remuneration for Directors is
decided each time it is paid considering by verifying the remunerations of other companies of the same industry and thesame size and taking into consideration the business resultsof the Company. The structure percentages of remuneration
paid to Internal Directors, External Directors and Auditors forthe fiscal year under review are indicated below.

Director

Basic compensation(fixed)Performance-linked
compensation

Internal Directors

67％

33％

External Directors
and Auditors

100％

−

Category

Name

Corporate
Management

Business Strategy

Eiichi Sakakibara

●

●

●

Katsunori Sugiura

●

●

●

Shinya Sugiura

●

●

●

Shigeyuki Kamino

Organization /Human Resources●●

Legal / Compliance /Risk Management

Finance / Accounting●●

Toshihiko Sakamoto●●

Kana Yasuda●●

Makoto Kamiya

●

●

●

Auditor● Educational program (for officers including those of

the major subsidiaries)
We continuously provide opportunities for External
Directors and External Auditors to share our management
philosophy, management plan, business overview, finance,
organization, etc.
We offer educational programs for Directors, Auditors andDirectors of the major subsidiaries concerning relevant laws,
finances, corporate governance, risk management, etc. when
they newly take office.
After they take office, we continuously provide or mediate
educational programs according to their duty, capability andexperience and offer them financial support for the cost.

Healthcare●

Yoshiko Hayama
Michiko Hori

Remuneration System for Directors and Auditors●●● Calculation method of performance-linked

compensation
According to the degrees of achievement of the budget of
consolidated ordinary income for each business year, we have
set the basic amounts for each title and position, to which
the degree of contribution by each Director is added. Then,the Representative Director who is delegated by the Board of
Directors decides the amount to be paid following the deliberation of the Nomination and Remuneration Committee.
The reason for using consolidated ordinary income as theindex to calculate the performance-linked compensation is
because we consider that the improvement of comprehensive
profitability including financial activities is critical.
● Calculation method of basic compensation (fixed)

The amount of basic compensation (fixed) is deliberated
by the Nomination and Remuneration Committee, and thatfor Directors is decided by the Representative Director who isdelegated by the Board of Directors whereas that for Auditors
is decided by deliberation of the Board of Auditors.

Total amount of remunerations for the fiscal year under review including remuneration for Directors and Auditors

Content of the educational programs (FY 2021)
ProgramStudy session

Legal and corporate
governanceDomestic and overseas
economic status

Management and FinanceCorporate governance code

Compliance

ESG

Organization and humanresource management

Trend of capital markets

Management strategy

Trend of medical systems

Digital transformation

Corporate management

Session with managers

Accounting and taxation

Category

Number of persons

Basic compensation(millions of yen)Bonus(millions of yen)

Total amount(millions of yen)

Director(of which, External Directors)

5
（3）

109
（14）

47
（−）

157
（14）

Auditor(of which, External Auditors)

4
（4）

17
（17）

−
（−）

17
（17）

Total
(of which, External Directors
and External Auditors)

9
（7）

127
（31）

47
（−）

174
（31）

Notes: 1. Total amount paid to Directors, etc. excludes the portion of employee’s salary for Directors who concurrently serve as employees.
2. The upper limit on remuneration for Directors was resolved at 400 million yen per year (not including employee salaries) at the 25th general meeting of shareholders held on May
24, 2007.
3. The upper limit on remuneration for Auditors was resolved at 30 million yen per year at the 25th general meeting of shareholders held on May 24, 2007.
4. The above-mentioned figures include the remuneration paid to one External Auditor who resigned at the end of the 38th general meeting of shareholders held on May 20, 2020.

47

48
Integrated Report 2021

Corporate GovernanceOVERVIEWGROWTH FOUNDATIONSTRATEGYDATA & PROFILEFoundation for Growth

Effectiveness Evaluation of the Board of Directors● Effectiveness evaluation of the Board of Directors

For the purpose of securing further effectiveness andimproving the functions of the Board of Directors, we implement an effectiveness evaluation of the Board of Directors.
We conducted a written questionnaire survey and heldinterviews on the self-evaluation with all Directors andAuditors concerning the effectiveness of the structure, operation and agenda of the Board of Directors, the systems
to support the Board of Directors, management strategy
and challenges.
Based on the results of the questionnaire survey, we
implemented constructive discussions for future initiatives
by sharing the current survey results within the Board of
Directors.
● Outline of the evaluation results

The effective evaluation conducted in the fiscal year
ended February 2021 indicated that effectiveness of the en-tire Board of Directors was secured at a high level.
Furthermore, in this survey, constructive opinions were
submitted in order to secure higher effectiveness such as
further improvement of discussion concerning managerial
opportunities and risks from the long-term perspective, improvement of educational programs for Directors and candidates for Directors, and further information sharing formonitoring by the Board of Directors. The Board of Directors
also discussed those opinions.
● Future initiatives

In order to secure higher effectiveness, we endeavor toconsider long-term strategies to respond to changes in theexternal environment such as the economy, the environment, medical system, etc. in the long run, improve educational programs for Directors and candidates for Directors,
and share the latest information including revisions to laws
and systems.

Relationships with Shareholders● Securing shareholders’ rights

As to all shareholders, including minority shareholders
and foreign shareholders, we are determined to appropriately act to treat them substantially equally according to thenumber of shares held, and secure shareholders’ rights asrepresented by the exercise of voting rights at the general
meeting of shareholders.
In the case where we are to implement a capital policythat may cause a change of control or a large-scale dilution,
we will resolve the matter by fully discussing the necessity
and rationality at the Board of Directors before providing
sufficient explanation to shareholders from the perspectivesof fulfilling fiduciary duties for shareholders.

Status of dialogues with investors (FY 2020)
Twice
25 times

Conference hosted by securities companies

6 times

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

133 times

holders and promoting profitable and effective management. We also endeavor to improve and further develop
our corporate governance by continuously examining thecontent of the basic policy.

Based on our management philosophy, we believe that
we should contribute to society by effectively utilizing assets
and resources borrowed from society such as people, products, stores, money and information, and returning profits
to society. To that end, we position the enhancement ofcorporate governance as one of the highest priorities of ourmanagement. We have also established a basic policy forthe purpose of being a sound and highly transparent listedcompany that provides accurate information to all stake-

Visit our website for the basic policyof corporate governance of the SUGI
Pharmacy Group.
URL: https://www.sugi-hd.co.jp/corporate_governance/basic_policy.pdf

Corporate Governance System

Diagram of the Corporate Governance System
The Company has shifted to a
General Meeting of Shareholders
Company with Audit and Supervisory
AppointBoard. In addition to the Board ofment /
ReportReportAppointment / dismissal
Appointment / dismissal
Directors comprising six Directors
dismissal
Audit(including three External Directors)
Board of Directors
Board of Auditors
and the Board of Auditors, we have
Cooperation
Reportestablished the Nomination andResponse
Supervision
Consultation
Remuneration Committee as an adRepresentative Director Nomination and Remuneration Committee Cooperation
visory organization to the Board of
Directors concerning nomination of,ReportResponse
Consultation
and remuneration for, Directors andDirection
Auditors. We also separated the funcSustainability Committee
Audit Department
tions of decision-making and superviCooperation
ReportDirection
sion of management from business
ReportAudit
execution, thus enhancing flexibility inbusiness execution by delegating theauthority to the management team except for the matters to be determined
Each department / Group company
by the Board of Directors in accordance[Internal Control System]with laws and regulations, the Articles
of Incorporation and internal rules.
Information
Security
Committee

Financial briefing small meetings for institutional
investors and analysts

Basic Views on Corporate GovernanceParticipation / report

Financial briefing for institutional investors andanalysts (1H and full-year)

We appropriately disclose information on a timely basis
in compliance with laws, ordinances and related regulations
toward the realization of fair and highly transparent management.
(1) We will proactively disclose both financial andnon-financial information if such information is considered useful for shareholders and other stakeholders todeepen their understanding of the Company.
(2) Disclosure will be made in such a manner that our shareholders and other stakeholders can easily access it.
(3) From the viewpoint of information disclosure particularly to overseas investors, we will prepare materials in
English concerning the Company profile, management
strategy, medium-term management plan, budget,
trend of business results, notice of convocation of thegeneral meeting of shareholders, corporate governancebasic policy and ESG. Those materials will be posted on
the website of SUGI Holdings Co., Ltd.

Risk Committee

investors
We endeavor to improve medium- to long-term corporate value through constructive dialogues with shareholders
and investors.
(1) We will focus on the improvement of IR activities to gain
understanding concerning our corporate philosophy,
management strategy, financial strategy, management
plan, business results and our concept of sustainability.
(2) The Representative Director and President will supervise
all aspects of dialogue, and consultation will be provided
by the relevant departments, if necessary.
(3) As for individual face-to-face meeting with shareholders
and investors, the IR department will serve as the con-

● Disclosure(1) In principle, we will not hold shares under a cross-shareholding policy toward the improvement of corporate
value except for a case of strategically important collaboration and a case where the maintenance and development of trading relationships are confirmed.
(2) As for shares held, we will periodically verify the rationality of holding the shares, and the Board of Directors
will check it on an annual basis, the details of which will
be disclosed. We will gradually sell the shares which we
considered less significant for continuing to hold while
checking the status of the relevant issuer.
(3) As for the exercise of voting rights of the shares held, we
will comprehensively determine by confirming in eachagendum whether it will contribute to the increase incorporate value from medium- to long-term perspectives while respecting the management policy of therelevant issuer.

Accounting Auditor● Constructive dialogues with shareholders andtact point, and the matter will be appropriately handledwithin the reasonable scope based on the requests of,and the purpose of the meeting with, the shareholders
and investors.
(4) In order to promote constructive dialogues with shareholders and investors, the IR department and other related departments will periodically exchange opinions andshare information based on professional viewpoints andrespond to the matter in cooperation with each other.
(5) Useful opinions and requests expressed in dialogues withshareholders and investors will be provided to the Boardof Directors, etc. as necessary.
(6) The composition of shareholders will be checked periodically, based on which communication will be improvedin an appropriate manner in line with shareholders andinvestors.
(7) In carrying out dialogues with shareholders and investors, we will comply with laws and ordinances and otherrelated rules, and manage insider information properly.

● Cross-shareholding

49

50
Integrated Report 2021

Corporate GovernanceOVERVIEW

STRATEGYGROWTH FOUNDATIONDATA & PROFILEFoundation for GrowthEstablishment of the Sustainability Committee

Risk

With the aim of promoting sustainability management, we have established the Sustainability Committee as an advisory organization to the Representative Director & President.
① The Sustainability Committee discusses the sustainability strategy and initiatives for the entire Group, and reports
and make proposals to the Representative Director & President.
② The Sustainability Committee consists of members appointed by the Representative Director and President as appropriate in light of the purpose of the committee.
③ The Risk Committee and the Information Security Committee have been established inside the Sustainability
Committee as the bodies that manage relevant risks and perform tasks assigned by the Sustainability Committee.

3. Risks relating to corporate management

3-1

3-2

Wrongdoing
and accidents

Occurrence of serious mistakes inprescription dispensing
Fraudulent activities by directors or
employees
Defective products, foreign
substance mixing, and inappropriate
labeling

Information
security

System failures caused by accidents,
defects, etc.
Illegal invasion and unauthorizedaccess from external network
Virus infection
Leakage of customer information

Human rights

Worsening of work environmentand safety and healthAct of human right violation(harassment and discriminatory
practices)

Risk Management
For the purpose of promoting sound, highly transparent
and efficient management, the Board of Directors will improve
the systems concerning compliance, appropriateness of financial reporting, risk management and others seeking more
effective functions in the internal control system from the perspectives of group management. And their operation statuswill be supervised by utilizing the internal audit section. In order to enhance the accuracy of internal control, we endeavor
to minimize the managerial risks through documenting andmonitoring the details of job duties of each Group company,
assumed risks and their countermeasures. The Representative
Director & President established the Risk Committee andthe Information Security Committee inside the Sustainability
Committee to control high-risk fields in the management, thus
quickly improving relevant works and preventing accidents.
The Risk Committee prevents risks from occurring by
evaluating and identifying serious risks concerning corporate
management such as business strategy, natural disasters andinfectious diseases, and by taking actions beforehand. In theevent of a crisis, we are prepared to immediately establish aseparate “emergency task force” to act quickly and appropriately.

3-3

Examples of the major risks to be managed
Risk

1-1

1-2

Business
environment

Related laws andregulations, etc.

Intensified competition with industry
peers and different industries
Industrial reorganization and oligopoly
through large-scale M&A

We have been engaging in management to contributeto society by effectively utilizing assets and resources borrowed from society (people, things, money, information,etc.) and continuing to provide profits to society. To realize
this, we understand that it is our managerial top priority
issue to strengthen information security of the entire Groupby protecting our customers’ personal information and other information assets owned by us from various threats including unauthorized access and cyber attacks.
Based on this concept, we established “Information Security
Basic Policy.” Going forward, we will endeavor to maintainand improve information security through compliance with,and proper handling of, the aforementioned policy and“Handling of Personal Information (Privacy Policy)” by the
directors and employees.

Visit our website for the

3-4

Human
resources

Shortage of managerial humanresources
Intensified competition for hiring
capable human resources

URL: https://www.sugi-hd.co.jp/information_security/basic_policy.pdf

Take-out and loss of data
3-5

Supply chain

Human rights and environmental
issues concerning supply chain
Changes in purchase prices

Reinforcing the prohibitionon the connection of
in-house PCs to external
equipment

Drastic reductions of drug prices anddispensing fees
Revisions to related tax systems andaccounting standards

Misdirection of email
1-3

Investments

Failure in investments in new stores
Failure in M&A investments

2. Risks relating to natural disasters and infectious diseases, etc.
● Inner Reporting System

For the purpose of preventing and correcting systematicor individual’s violation of laws and ordinances or misconduct,
we have established a compliance counseling system, enabling employees to seek counseling anonymously. The Inner
Reporting System is operated in accordance with the internal
rules, and contact points are set within the Group and in external law offices.
In order to prohibit disadvantageous treatment of informants, and increase the profile and understanding of theabove-mentioned system, we have ensured that contact
information for the system is displayed at our stores and offices, and have also distributed the Compliance and Disaster
Countermeasure Pocket Book. By doing so, we endeavor toestablish a sound reporting system.

● Information Security Basic Policy

Information Security Basic Policy.

Examples of the major risks

1. Risks concerning business strategy

Examples of the major risks

2-1

Large-scaledisasters

Stagnant economic activities
Suspension of business activities due
to damage to stores, offices, systems
and employees
Damage to properties held and repair
costs arising from it● Establishing an

investigation system incase of information
leakage● Ensuring evidence forfollow-up

Unauthorized access from outside● Installing a firewall● Preventing virus emails

2-2

Climate change

Damage to stores and facilities due totyphoons, heavy rains, etc.
Introduction of a carbon tax, etc. dueto the strengthening of regulations

from being received● We have security rooms and security cameras.
● We strive to increase our in-house security by distribut-

2-3

Infectious
diseases

Stagnant economic activities
Self-restraint and suspension ofbusiness activities at stores
Suspension of business activities due
to infection of employees

ing security cards to employees and granting them thenecessary access 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.

51

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Integrated Report 2021

Corporate GovernanceOVERVIEW

STRATEGYDATA & PROFILEGROWTH FOUNDATION

Data & Corporate Profile

Financial IndicesNon-financial indices(Millions of yen)

FY 2016

FY 2017

FY 2018

FY 2019

FY 2018

FY 2020

Net sales

430,795

457,047

488,464

541,964

602,510

Operating income

22,832

24,76025,817

29,76233,701

Ordinary income

23,87525,90027,23731,47335,333

Profit attributable to owners of parent

14,947

16,411

17,94020,782

21,120Depreciation

5,599

6,455

7,389

8,412

9,940

Cash flows from operating activities

16,912

27,56422,89445,35334,027

Cash flows from investing activities(18,439)(17,911)(22,362)(18,422)(29,254)

Cash flows from financial activities(3,506)(3,401)(13,897)(4,895)(5,274)

Cash and cash equivalents

41,42547,67634,311

56,34755,845FY 2019

FY 2020

Numbers representing the Company
Number of stores

1,190

1,287

1,391

102

116

121

722,317781,303

847,543

245,658,072

269,803,126

316,850,068

15,154,963

16,459,486

18,042,809

Number of SUGI Pharmacy app downloads−

3,506,481

6,018,926

Number of SUGIsapo app downloads−

611,625

1,549,738

Number of kakari app downloads−−

161,060

Number of prescription dispensing pharmacies

833

930

1,050

Percentage of prescription dispensing stores (%)

78.4

80.0

82.9

Number of prescription sheets filled by us (thousands)

8,698

9,833

10,101

Number of stores providing home-visit prescription dispensing services

447

487

541

Total number of customers who used home-visit prescription dispensing services

115,326

128,880

146,794

9

11

13

11,645

12,453

14,590Total number of partnership agreements concluded

−

53

58

Total number of stores where AEDs are installed

27

47

130

5,494

6,182

6,710

Men

3,074

3,340

3,540

Number of new stores
Year-end total square meters of sales floor
Numbers relating to customer base
Number of visitors per year
Number of SUGI Pharmacy point members*1*2

Numbers relating to prescription dispensing

End of consolidated fiscal year
Net assets

148,782

162,046

166,563

182,750

200,629

Total assets

230,664

253,989

265,481313,757

345,933

Per share information
Net income (yen)

236

259

287

336

341

Net asset (yen)

2,349

2,559

2,694

2,956

3,245

Dividend (yen)

50

60

70

80

80

Numbers relating to function updates for aging society

Number of home-visit nursing stations
Total number of customers who used home-visit nursing services
Numbers relating to contribution to the enhancement of community safety and security

Management indices (%)

Basic numbers relating to employees

Equity ratio

64.5

63.8

62.7

58.2

58.0

Return on equity (ROE)

10.5

10.6

10.9

11.9

11.0

Return on total assets (ROA)

10.6

10.7

10.5

10.9

10.7

Women

2,420

2,842

3,170

Payout ratio

21.2

23.1

24.3

23.8

23.4

Percentage of women

44.0

46.0

47.2

Percentage of partner employees (converted into the number of 8-hour workers)

61.5

62.5

63.1

Number of new graduates hired

568

590

726

Number of managers

1,536

1,679

2,005

Percentage of female managers (%)

11.6

13.6

15.6

Percentage of disabled employees (%)

2.47

2.54

2.36

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

90.1

93.4

93.7

Regular health checkup rate

92.7

99.7

99.6

Specific health guidance rate (completion rate)

7.9

88.4

82.2

240,121250,121

To be fixed.

Number of full-time employees

Annual sales growth rate (%)
All stores: Corporate group as a whole

+3.8

+6.0

+6.9

+11.0

+11.2

All stores: SUGI Pharmacy operations*

+5.8

+8.3

+9.9

+13.8

+12.7

Existing stores: Corporate group as a whole

+0.6

+2.3

+2.2

+5.1

+4.3

Existing stores: SUGI Pharmacy operations*

+1.1

+2.7

+2.6

+5.9

+4.7

Prescription dispensing information

Numbers relating to safety and health (%)

Sales from prescription dispensing

75,484

84,10891,074105,279

117,597

Number of prescription sheets filled by us

6,982

7,704

8,698

9,833

10,101

Prescription cost (yen)10,81010,917

10,471

10,707

11,642*“SUGI Pharmacy operations” presents only the number of stores of SUGI Pharmacy.

Numbers relating to diversity and work style

Numbers relating to the environment
Electric power consumption (thousand KWH)

*1 This is the number since the revamp of the app in October 2018. *2 This is the total number of downloads of the Walk app and the Eats app.

53

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Integrated Report 2021

Financial Indices/Non-financial indicesOVERVIEW

STRATEGYDATA & PROFILEGROWTH FOUNDATION

Data & Corporate Profile

Consolidated Balance Sheet(Millions of yen)

(Millions of yen)

As of the end of As of the end of
FY 2019
FY 2020

As of the end of As of the end of
FY 2019
FY 2020(Feb. 29, 2020)(Feb. 28, 2021)

Assets(Feb. 29, 2020)(Feb. 28, 2021)

Liabilities

Current assets
Cash and deposits

Current liabilities
81,34728,211

31,655

Securities

10,0009,000

Inventory

63,66871,165

OthersAllowance for doubtful accounts
Total current assets

13,66915,207(13)(1)

196,883

213,871

Accounts payable - trade82,47991,061

Income taxes payable

5,220

6,588

Provision for bonuses
Others

1,955
26,1232,599
28,142

Total current liabilities

115,779

128,391(Mar. 1, 2019 to Feb. 28, 2020)

Retirement benefit liability

6,379

7,304

541,964

602,510

Cost of sales

379,782

421,219

Gross profit

162,182

181,291

Salaries, allowances and bonuses

54,70860,524

Provision for bonuses

1,934

2,576

Retirement benefit expenses

1,131

1,081

Rent expenses

25,92630,122Others

48,71853,284

Total selling, general and administrative expenses

132,420

147,590

29,76233,701

Interest income

93

88

Dividend income

660Operating income

Rental income

595

439

1,660

1,801

566

464

−

550

Commission income
88,705

101,330

Asset retirement obligations

5,517

6,087

Accumulated depreciation(36,711)(41,419)

Others

3,330

3,520

Buildings and structures (net)51,994

59,910Total fixed liabilities

15,22816,912

Land

7,858

8,517

Construction in progress

4,822

2,861

Others31,34635,963

Subsidy income
OthersOthers (net)Total tangible fixed assets
Intangible assets(21,745)(25,043)

9,601

10,91974,27682,209

3,542

5,326

131,007145,304

Net Assets

15,434

15,434

Capital surplus

24,632

24,632Retained earnings

151,807

167,983

Treasury stock(9,297)(9,298)

Total shareholders’ equity

182,577

198,751

4

4

Deferred tax assets

8,603

9,839

Accumulated other comprehensive income

Guarantee deposits

22,861

25,747

Valuation difference on available-for-sale securities

Others

4,265

2,938

(23)

(36)

Total investments and others
Total fixed assets

39,05444,527

116,874

132,062

313,757

345,933

22

21
1,425

Loss on retirement of non-current assets

249

135

Others

178

493

1,592

2,075

31,47335,333

1,546

3,812

Extraordinary losses
Capital stock

6,032

Allowance for doubtful accounts

302
3,708

1,142

Rental costs

Total non-operating income

Shareholders’ equity

3,342

Long-term loans receivable

381
3,304

Interest expenses

Ordinary income

Investments and others
Investment securities

Total non-operating income
Non-operating expenses

Total Liabilities

Accumulated depreciation(Mar. 1, 2020 to Feb. 28, 2021)

Net sales

Gain on donation of non-current assets

Fixed assets

Buildings and structures(Millions of yen)

FY 2020

Non-operating income

Fixed liabilities

Tangible fixed assets

Consolidated Statement of Income

FY 2019

Selling, general and administrative expenses

86,845

Accounts receivable – trade

Consolidated Statement of Income and Consolidated
Statement of Comprehensive Income

Remeasurements of defined
benefit plans
Total accumulated other comprehensive income
Total Net Assets

Impairment loss
Total extraordinary losses

1,546

3,812

Profit before income taxes

29,926

31,521

Income taxes – current

10,496

12,355

Income taxes – deferred(1,352)(1,955)

Total income taxes

9,144

10,400Net income

20,782

21,120

Profit attributable to owners of parent

20,782

21,120(Millions of yen)

Consolidated Statement of Comprehensive Income
317
(144)

2,208
(329)

172

1,878

182,750

200,629

313,757

345,933

Net income

FY 2019

FY 2020(Mar. 1, 2019 to Feb. 28, 2020)(Mar. 1, 2020 to Feb. 28, 2021)

20,782

21,120

Valuation difference on available-for-sale securities

66

1,890

Remeasurements of defined benefit plans

(25)

(185)

Other comprehensive income

Total other comprehensive income
Comprehensive income

41

1,705

20,823

22,82520,823

22,825(Breakdown)
Total Assets

Total Liabilities and Net Assets

Comprehensive income attributable to owners of parent

55

56
Integrated Report 2021

Consolidated Balance Sheet/Consolidated Statement of Income and Consolidated Statement of Comprehensive Income

OVERVIEW

STRATEGYDATA & PROFILEGROWTH FOUNDATION

Data & Corporate Profile

Consolidated Statement of Cash Flows

Corporate Profile and Stock Information(Millions of yen)

FY 2019

FY 2020(From Mar. 1, 2019 to Feb. 29, 2020)(From Mar. 1, 2020 to Feb. 28, 2021)

Cash flows from operating activities
Profit before income taxes

29,926

31,521

Depreciation

8,412

9,940

Impairment loss

1,546

3,812

Increase (decrease) in provision for bonuses

610

643

Increase (decrease) in retirement benefit liability

646

644

Increase (decrease) in allowance for doubtful accounts

(14)

0

Interest and dividend income

(100)

(149)

Gain on donation of non-current assets

(397)

(271)

Interest expenses

22

21

Loss on retirement of non-current assets

45

10Decrease (increase) in trade receivables(8,391)(3,443)

Decrease (increase) in inventories(4,099)(7,445)

Increase (decrease) in trade payables

24,225

8,586

Others

2,417

1,081

Sub-total

54,851

44,952

Interest and dividends received

29

84Interest paid

(18)

(17)

Income taxes paid

(9,508)(10,993)

Net cash provided by (used in) operating activities

45,35334,027

Cash flows from investing activities
Payments into time deposits(62,000)(67,000)

Proceeds from withdrawal of time deposits

66,00063,000Purchase of securities(37,000)(32,000)

Proceeds from redemption of securities

42,00031,000Purchase of property, plant and equipment(19,389)(18,627)

Purchase of intangible assets(998)(2,936)(2,011)

(43)

1

0

(4,659)(2,505)

Proceeds from refund of guarantee deposits

488

267

Others

(853)

(408)

(18,422)(29,254)

Purchase of investment securities
Collection of loans receivable
Payments of guarantee deposits

Net cash provided by (used in) investing activities
Cash flows from financial activities
Purchase of treasury shares
Repayments of finance lease obligations

(0)

(328)
(4,944)(15)(0)(4,895)(5,274)

Net increase (decrease) in cash and cash equivalents

22,035(502)

Cash and cash equivalents at beginning of period

34,311

56,347

Cash and cash equivalents at end of period

56,34755,845

Net cash provided by (used in) financial activities

Stock Information

Trade name:
SUGI Holdings Co., Ltd.
Established:
March 8, 1982
Capital:15,434,588,000 yen
Number of employees: 6,710 (on a consolidated basis)
Major operations:Control and management of companies
operating in such fields as prescription
dispensing, drugstores, and home-visit
nursing stations
Headquarters:
62-1, Shin’e, Yokone-machi, Obu-City,
Aichi Prefecture 474-0011
Main store:
1-8-4, Mikawa Anjo-cho, Anjo City,
Aichi Prefecture 446-0056
Number of stores:
1,391 (Total of the Group)- Sugi Pharmacy: 1,267- Japan: 111- SUGI home-visit nursing stations: 13
Directors (as of May 19, 2021)
Representative Director& Chairman:
Eiichi Sakakibara
Representative Director& President:
Katsunori Sugiura
Director:
Shinya Sugiura
External Director:
Shigeyuki Kamino
External Director:
Yoshiko Hayama
External Director:
Michiko Hori
External Full-time
Auditor:Toshihiko Sakamoto
External Auditor:
Kana Yasuda
External Auditor:
Makoto Kamiya

Total number of shares authorized to be issued by the Company:
200,000,000
Total number of issued shares:
63,330,838
Number of shareholders:
27,585
Share distribution according to shareholders■ Financial institutions:14.46%■ Financial instrumentbusiness operators:

1.12%■ Other domestic
corporations:35.21%■ Foreigners:

31.67%■ Individuals and others:

15.14%■ Treasury shares:

2.40%

Major shareholders (Top 10)

Number ofshares held Shareholding(Unit: thousand)ratio (%)
20,605
33.33

Name
Sugi Shoji Co., Ltd.
The Master Trust Bank of Japan (trust account)

3,878

6.27

Katsunori Sugiura

1,892

3.06

Shinya Sugiura

1,892

3.06

Custody Bank of Japan, Ltd. (trust account)

1,658

2.68

ＴＨＥ BANK OF NEW YORK MELLON 140051

1,472

2.38

Tsuruha Co., Ltd.

1,272

2.05

STATE STREET LONDON CARE OF STATESTREET BANK AND TRUST, BOSTONSSBTC A/C UK LONDON BRANCHCLIENTS- UNITED KINGDOM

1,199

1.94

STATE STREET BANK AND TRUST COMPANY 505223

1,086

1.75

THE BANK OF NEW YORK MELLON 140042

1,015

1.64

(Notes) 1. We possess 1,517,115 treasury shares, but exclude ourselves from the above list of the major
shareholders.
2. The shareholding ratio is calculated after excluding our treasury shares.

Share Price Chart *Adjusted prices after stock split are shown.
(Yen)
10,000

8,000

(1)

(244)

OthersCorporate Profile

6,000(4,634)

Dividends paid

(As of February 28, 2021)

4,000

2,000

0

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(FY)

*1. FY 2001 represents the period from August 1, 2001 to February 28, 2002. *2. FY 2021 represents the period from March 1, 2021 to May 7, 2021.

57

58
Integrated Report 2021

Consolidated Statement of Cash Flows/Corporate Profile and Stock Information