Established in 1964 in Osaka, Japan, Yuyama specializes in the field of medical and pharmaceutical automation, supplying a wide range of high-quality automated equipment to pharmacies, hospitals and long-term care facilities in Japan and around the world. It is the largest Pharmacy Automation Company worldwide and was the first company to introduce an automatic dividing packaging machine to the market. We speak with president Hiroyuki Yuyama, who gives his insight into the pharmaceutical industry, his company and its products.
What is the role of monozukuri in your company and tell us why Japan is still number one when it comes to the quality and reliability of products?
Normally, medical knowledge and technology comes from the US or European countries, however, in terms of dispensing machines and technologies for it, Japan is already advanced compared to other countries because those countries didn’t have powdered drugs. Here in South East Asia, we’ve had powdered drugs for a long time, so the technology for the packaging of the powdered drugs was mandatory in these countries. That’s why we have been making dispensing machines for fifty or seventy years. Of course, countries like China, South Korea, or Taiwan needed that technology as well. However, they didn’t have that technology, they advanced the technology. That’s why Japanese manufacturers including Yuyama have been the leading companies in this field.
We exported our products to countries like South Korea, Taiwan or China. As you’ve mentioned they’ve started replicating our products and copied our technologies and produced products at lower prices. But we have upgraded our products and technologies continuously and we are able to provide them with products of higher qualities. The growing companies are willing to choose Yuyama’s products now.
Since the 1990s Japan has entered a stagnation stage in its economy in which the manufacturers focus domestically to meet domestic needs. Now, when they try to market their high quality, highly reliable products overseas, they are faced with what we call the Galapagos Syndrome in which they are unable to compete with other countries. What should Japanese companies do to overcome these challenges? As a company, what are you doing to capture the overseas market?
At one time we almost gave up competing with cheaper competitors and we almost exited that market because we thought we could not compete with them in similar products. However, we kept advancing our technologies and over time the demands from Taiwan, South Korea and China have changed; they have demanded more convenient and safer products. So in order to meet their demands, Yuyama upped its efforts and we have got a certain position in the market which is a result of meeting those expectations. As expectations have improved, our customers have changed their mindset and it is very important to keep meeting their requests and expectations. That is one strategy that we have been undertaking.
In terms of copying our technology or products, I believe it is easy to copy something that is already complete or finished. For example, when you cook, it is easy to copy somebody’s cooking after you look at the recipe. However, what about the taste of the food even if you follow the recipe? It requires a lot of trial and error to actually copy the essence of the product. The process is important and experiencing the process of trial and error is really the essence of monozukuri. It is easy to copy the complete product, but in order to complete something you have to take that painful process. I believe the people in Taiwan, South Korea, and China have realized this, and that’s why they are demanding the products from us.
We’re now in the fourth industrial revolution and seeing new innovative technologies that are basically influencing the back-end processes with technologies such as AI, IOT, and 5G being adopted, depending on the industry. In your specific case, we know that innovative technologies are being used in the pharmaceutical industry in order to regain trust and reduce the cost. Could you please tell us how these innovative technologies impacted your business and what solutions are you offering to your customers?
The technology for the imaging solutions or robotics has been advancing very rapidly more than we had imagined. We have been putting in a lot of effort to advance our technology and install these into the machines of our clients so that the process can be automated at the clients’ end. For example, with the powder-dispensing machine, we incorporated a lot of advanced technology in it and we were able to automate the process of dispensing.
The pharmaceutical industry is expected to expand in the coming years and reach a value of nearly $1 trillion. With this growth we are seeing pharmaceutical companies outsourcing their products to smaller biotech firms, another sector of the industry that is booming due to the effect of the growing pharmaceutical industry. We are also seeing an increase in demand for products such as yours in the Asia-Pacific region, North America and Europe. Could you please tell us how you are supporting pharmaceutical companies and how you are going to take advantage of this global growth?
Speaking about the pharmaceutical market in Japan, the licensed pharmacists are the only ones who can do the dispensing at hospitals or drug stores. They need to spend four years in college to get the license, but it has been changed to six years now. The more advanced technologies require two pharmacists, however, speaking about the process of dispensing it is rather simple. Recently the government is recommending that pharmacists get closer to the patients rather than just doing the dispensing work at the back end. They need to spend more time communicating with the patients. In order for them to do this, they need to reduce the time for the dispensing work. That’s why the automation of the machines has advanced very rapidly. Recently, even the people with no license can do some dispensing work as long as the safety is assured. In order for them to do the dispensing, we need to install machines that can guarantee the safety of these dispensing as well as the automated process. These are the recent trends in Japan.
Looking at the US and European countries, we don’t often see the pharmacists dispensing drugs at the back end, most of them are communicating with the patients and can even do vaccinations, meanwhile, Japanese pharmacists are not allowed to do so. It is important for us to create that kind of environment where the pharmacists can get closer to the patients and I think there's still room for further growth in this field. We are trying to provide technologies from Japan to the world and get knowledge from the world as well. In terms of dispensing technology Japan is more advanced than other countries, but in regard to the way of thinking the US and European countries are way more advanced. We would like to mix and incorporate these good things together.
One recent trend that we have seen with different Japanese companies, especially in the pharmaceutical industry, is that they are now trying to shift overseas to find partners for co-creation and to create synergies between the Japanese monozukuri and foreign technology in order to penetrate new markets and to introduce new technology together? Could you tell us the importance of co-creation for your company and in which countries are you looking to find partners?
I believe that co-creation is extremely important and can be best achieved if we work together with the users. We get the challenge when the users have a problem and we think together to understand what the problem is and think of solutions, then supply the system or machines with these solutions. This is the kind of cycle that we have been working together with the users as a form of co-creation. The same is true with the overseas markets as well, we have been working together with large pharmaceutical companies or drug stores. With a company we worked with, we entered their stores and came up with a solution to their problems and they asked us to set up an automated machine. That is one challenge that we have had with a user which made us a company think of a solution.
Back in 1995 to 2003 our company worked together with a certain store and learned from them their know-how and their ways of thinking which serve as some kind of stimulus for us.
The vision at your company is to become a reliable partner to all healthcare professionals through your medical supplies. Could you please tell our international readers what exactly are your competitive advantages?
In short, our competitive edge is that we can move swiftly, provide detailed care to the customers, decide very fast and make anything because we have the technology for it. Normally when a company produces something they do the market research and see whether or not the product is going to sell in the market. This is not the way we have been doing things, what we have done so far is when our customer has a problem, we try to find solutions right away. That’s our way of doing this kind of business and that’s our edge. We can produce something before any other competitors do. Sometimes we experience failures, however, we make speedy decisions and developments.
In the past two years you have been able to introduce eight products to the market, the latest one was in January 2020 which was the fully automated powder packaging machine. Looking towards the future, do you have a specific product that you would like to showcase to us and to our international readers?
We are thinking about some solutions for the larger-scale drugstores, but I cannot go deep into this because of confidentiality. Since automation is advancing so rapidly, we are trying to incorporate that technology into our products. The world is facing an aging society which means more and more people will be needing drugs. The volume of the drugs in the market is surely going to increase, the packaging technology needs to be advanced. In particular, we are trying to package customized drugs so that we can enhance the compliance and safety of the patients and also enhance the effects of medications.
I see you have different types of products that are mainly for the domestic market. You also have a segment which is targeted for overseas products which involves packaging tablets. Could you please tell us what are your best selling products in the overseas market and which one are you looking to target in the near future?
That is the PROUD machine. We would like to expand the market share of our POUCH machine too. The pouch machine we are trying to produce is not just about packaging the drug, but it needs to guarantee the safety, package the drugs quickly and it should remove the air. That is what we are trying to create.
Looking into the future what would be your midterm strategy to continue your corporate growth and to continue being a leading company manufacturing dispensing machines?
The premise for our business is to invest whatever we have in our assets into the dispensing machine. This is our midterm and long-term plan even though there are some other products that could have better sales prospects; however, we just have to focus on our dispensing machines for the time being. The environment surrounding our field is changing a lot, we are trying to adapt to these changes and incorporate those changes into our technology and products as soon as possible. For example, Amazon bought the Pillpack and they are trying to centralize the dispensing system. In the European countries there are a lot of cutting-edge drug stores but in Japan we don’t see that kind of trend yet. However, we are trying to be ready for that new advancement. Even though the dispensing process is centralized, we have to be ready for the new stage.
In terms of the breakdown of our revenue, 85-90% comes from the domestic market, 10-15% is from the overseas market. We would like to be firmly-rooted in the domestic market and then try to expand in the overseas market as well.
You are a leading company in the domestic market, but what is more challenging is to be a global leader. You mentioned that you would like to increase your share in the overseas market. How do you plan to do so and what is your international strategy to increase your share?
We are thinking of several approaches like increasing distributors in the local market or developing new products and entering into the international market. We would also like to increase our share in the US and Chinese market.
This is a family business. Imagine we will come back to interview you again in the next generation. What legacy would you like to leave?
My goal is to be number one in the world, not just in Japan. When it comes to the dispensing machine, I would like all the people to say, “Yuyama!” anywhere in the world. We are not in a very big market but if we make utmost effort then it’s not impossible especially with the technology that we have.