In the preceding fiscal year, the TOHO HOLDINGS Group faced severe business conditions such as hikes in manufacturer invoice prices and difficult conditions for price negotiations with medical institutions, as well as intensified price competition among wholesalers. However, for fiscal 2012, the Company has been promoting proposal-based marketing and sales by taking advantage of its unique customer support systems based on the major business target of securing appropriate profits, and has been tackling improvements in relation to distribution problems, including provisional shipping with the pricing yet to be negotiated, total value transactions and the issue of the gap between the NHI price and the market price.
As a result, the Group’s net sales for the consolidated cumulative second quarter of the fiscal year ending March 2012 stood at 539,360 million yen (an increase of 3.8% compared with the same period of the previous year), supported by the excellent results of proposal-based marketing and sales and the effects of newly consolidated subsidiaries and the steady growth of existing subsidiaries in the dispensing pharmacy business in the preceding fiscal year. As for profits, consolidated operating income for the first half was 4,110 million yen (a decrease of 18.8% on a year-on-year basis), showing an achievement rate of 141.7% of the initial projection, due primarily to the reduction in SG&A expenses of approx. 1,400 million yen from the originally planned figure as a result of Group-wide efforts to curtail expenses. Ordinary income was 6,059 million yen (a decrease of 15.1% against the same period a year earlier) with an achievement rate of 137.7% of the initial projection for the first half. Net income for the quarter stood at 3,364 million yen (a decrease of 8.9% on a year-on-year basis) with an achievement rate of 146.3% of the initial projection.
The Company will steadily implement various measures for the improvement of profitability and diversification of the sources of profits in each business field.
In its pharmaceutical wholesaling operations, the Company will continue to further expand its scale of business, after achieving net sales of one trillion yen in the previous year. During the consolidated cumulative second quarter of the current year, the Company made SHOUEI CO., LTD. a wholly owned subsidiary through stock swaps in April, 2011, and in October this year, also made Koizumi Yakuhin Co., Ltd., a consolidated subsidiary of IWAKI & CO., LTD. its subsidiary through the acquisition of all outstanding shares of Koizumi Yakuhin Co., Ltd. by Toho Pharmaceutical Co., Ltd., a wholly owned subsidiary of the Company. TOHO HOLDINGS will continue to tackle the maximization of the group-synergy with active utilization of the group-wide management resources through the Kyoso Mirai Group with the Company as its core company.
Furthermore, the Company has been strengthening its fee-business that provides pharmaceutical manufacturers with information obtained from the medical frontline, which utilizes a smartphone “Meissa” used by the Company’s employees in charge of marketing and sales. A Meissa can accept directly voice input of information collected from hospitals, clinics and dispensing pharmacies and send the information converted automatically into character data to the MR in charge by e-mail. This business is ranked as a new source of profit and one of the most important services that feed site information back to the pharmaceutical manufacturers.
In the field of dispensing pharmacy operations, the Company will strive to reduce related expenses and improve profitability by promoting the systematization of the functions of the main office and centralizing the work of each company, as well as to enhance the functions of pharmacies in relation to dispensing, dispatching of information, home medical care and self-medication, while seeking to become a medical provider responsible for community’s health.
As a new service to consumers, the TOHO HOLDINGS Group started operation of the service called “Okusuri Yoyaku (Drug Reservation)” on the website “eKenkoshop” operated by a member of the Group. This is a service that makes it possible to purchase pharmaceutical products after receiving instruction in the use of the drug from a pharmacist at a designated pharmacy, by selecting the name of the OTC drug and a pharmacy at which a customer receives drugs on the website. Patients can expect a service covering the total management of prescription drugs and OTC drugs, and on the other hand, each pharmacy can improve its value as a family pharmacy by utilizing the selection method of OTC drugs based on side effects resulting from taking multiple medicines and records of medicines taken in the past. At present, the number of pharmacies where the receipt of OTC drugs is available is about 11,000 shops. The Group aims to eventually achieve the participation of 30,000 shops (around 60% of the total number of pharmacies in Japan).
TBC Kyushu was completed as a new distribution center in Kumamoto prefecture in April 2011 and started full-scale operations from June. It has introduced state-of-the-art warehouse management systems and realized traceability for our customers by controlling the lot-numbers and expiry dates of pharmaceuticals. Provision of pharmaceuticals to the Kyushu and Okinawa area, which had been carried out by TBC Okayama in the past, was switched to TBC Kyushu to improve distribution services and diversify distribution risks.
In the future, the Group also plans to construct a New Saitama Distribution Center and New Osaka Distribution Center and make efforts to construct a distribution network to ensure even more accurate, prompt and stable supplies of pharmaceuticals even in the event of emergencies such as earthquake disasters.
Considering distribution of earnings to shareholders to be one of the important topics of management, the Company recognizes its duty to increase earnings per share. On the subject of distribution of earnings, our basic policy is to pay stable dividends while also striving to strengthen the revenue base for the future and ensure sufficient internal reserves for withstanding market fluctuations, and we intend to take into consideration changes in business performance in each fiscal year as well. Based on this policy, we have decided to pay interim dividends and end-of-year dividends of eight yen per share each in fiscal 2011, for an annual dividend of 16 yen per share.
We appreciate the continued support of our shareholders.
Investor Relations 
