Business Risks
The main risks that may affect the business performance and financial position of the Group are as follows. The Group recognizes the possibility of these risks occurring and has a policy of working to prevent them from occurring and to respond if they do occur.
This section contains forward-looking statements, but these statements are based on judgments made as of the end of the current consolidated fiscal year.
1. Legal and regulatory changes and government actions
The Group's business is affected by regulations (including deregulation) under the Pharmaceutical and Medical Device Act and other related laws and regulations. Any future changes to these regulations may have an impact on our business performance and financial position.
2. Overseas expansion
The Group is expanding its business globally, and in recent years, overseas sales have accounted for a certain percentage of total consolidated sales (overseas sales for the current consolidated fiscal year amounted to 47.0% of total consolidated sales). As a result, unexpected deterioration in local political and economic conditions, as well as changes in laws and regulations, could have an impact on our business performance and financial position.
3. Dependence on specific major customers
The Group's top three clients account for 33.4% of its total sales, and any bad debts arising from the business activities or bankruptcy of these clients may have an impact on its business performance and financial position.
4. Termination of business alliances
The Group has entered into various partnerships with other companies, such as joint development, joint sales, and product in-licensing (including manufacturing and sales under license agreements). However, if these partnerships are to be dissolved in the future for any reason, this could have an impact on our business performance and financial position.
5. Business investmentｓ
In order to expand existing businesses and develop new ones, the Group may strengthen its alliances with other companies both within the Group and outside the Group or enter into new alliances. For this reason, the Group engages in investment activities such as establishing new companies in partnership with other companies or investing in existing companies, and may continue to engage in investment activities in the future. If the corporate value or market value of the stocks, etc. of the companies in which it invests declines, this may have an impact on its business performance and financial condition.
6. Product discontinuation and recalls
If some of the Group's products are discontinued or recalled due to defects, unexpected side effects, contamination, or other reasons, this could have an impact on our business performance and financial position.
7. Intellectual property rights and litigation
If the Group is unable to properly protect its intellectual property rights, a third party may use the Group's technology, etc., which could have an adverse effect on the Group's competitiveness in the market. Furthermore, the Group is careful to avoid infringing on the intellectual property rights of third parties and conducts investigations. However, in the unlikely event that the Group infringes on a third party's intellectual property rights, the Group may be sued for damages or be required to pay compensation, which could have an adverse effect on its business performance and financial position. In addition to intellectual property rights, there is also the possibility that lawsuits may be filed regarding product liability, environmental issues, and other matters, and depending on the content and outcome of such lawsuits, their business performance and financial position could be affected.
8. Information systems and information management
As the Group uses various information systems to carry out its business, there is a possibility that system outages or malfunctions could hinder the efficient execution of business operations. In addition, as the Group holds a large amount of information, including personal information, it has established an internal management system and is working to improve information management. However, in the unlikely event that an information leak were to occur, this could result in a loss of credibility and affect its business performance and financial position.
9. Natural and other disasters
The Group produces the main products sold domestically at its headquarters factory, Ueno factory, etc., and ships them from the central logistics center, etc. Although we pay careful attention to safety management, if the factories or logistics centers, etc., are forced to suspend operations due to a fire, earthquake, or other disaster, this could have an impact on our business performance and financial position.
10. Fluctuations in foreign exchange rates, stock prices and interest rates
As the Group operates globally, fluctuations in exchange rates may affect its business performance and financial position. In addition, the Group holds securities and interest-bearing liabilities with market value, and trends in stock prices and interest rates may affect its business performance and financial position.
11. Addressing climate change and other societal challenges
Due to the effects of climate change, the prices of raw materials and fuel are expected to continue to rise, which may lead to higher costs. The Group's business is also affected by changes in consumer and customer needs. Increased development costs to provide products and services that meet growing customer needs for sustainability may have an impact on our business performance.
12. Other external factors
Increases or decreases in shipments and returns due to seasonal factors such as cool summers, warm winters, and pollen levels, as well as a greater-than-expected decline in market prices in a severe competitive environment, may have an impact on our business performance and financial position.
There are various other risks in addition to those mentioned above, and the risks listed here are not all that the Group faces.