Medical devices, pharmaceuticals and glass pharmaceutical packaging products are the forte of the Nipro Corporation, and as such is well positioned to benefit from the rising global prefilled syringes market, which accounted for $3.9 billion in 2014 and is expected to grow with a CAGR of 12.9% during 2015-2020. Yoshihiko Sano, President of Nipro Corporation, explains how it is on track to hit its ambitious growth targets for 2020, its corporate culture of innovation, and its commitment to improve the working lives of medical staff and the healthy life expectations of people worldwide.
Since Nipro’s founding more than 60 years ago the corporation has established a well earned and deserved reputation across the industry for its ingenious, high quality product range and constant pursuit of innovative ideas and technologies. It now has more than 20,000 employees and a market cap of approx. 170bn yen. What in your opinion have been the key ingredients in making such a now globally recognized and successful entity?
The end-users of products manufactured by Nipro are patients ultimately; however they rarely ever demand just pharmaceutical products, but rather expect to receive a systemized, streamlined delivery of a group of healthcare products. Nipro has the capability of offering a wide variety of pharmaceutical products that fulfill this demand and we can offer these products as a system specifically through offering medical equipment, disposable medical devices, diagnostic equipment, pharmaceutical products, pharmaceutical product packaging materials, and other medical products.
My predecessor once said that he would make Nipro become a pleasant working environment for those who are “motivated” and “willing” to take on new challenges. This is our credo today. Nipro has always been actively investing and supporting efforts initiated by our employees until we reach success. This is fundamental in our pursuit of innovative solutions and new ideas. I am currently striving to nurture a culture of autonomy throughout Nipro by establishing a system where each department is given a high level of autonomy – they are given the flexibility to adjust their bonuses based on the achievements for their projects thereby allowing flexibility to take on new initiatives.
As a corporation, Nipro has known the impact of globalization that Japan will confront in the future from an early stage. This lead to the development of the trinity product lines – medical devices, pharmaceuticals and glass products as pharmaceutical product packaging – that we operate today. This strategic move was indeed a large investment for Nipro, but also a much needed one in order to build the capability to offer a pharmaceutical solution.
Besides innovation and globalization, our corporate philosophy places a high level of importance on improving quality of life of our customers, and thereby creating accomplishing results for the company. We also strive to ensure that our employees’ efforts and results, on an individual and department level, are properly recognized and rewarded.
In the pharmaceutical industry, tests can be done on animals in a laboratory setting at a maximum, and therefore, regarding clinical data in human, gathering information through clinical data from hospitals and feedback from doctors becomes particularly important. I believe that it is essential for healthcare companies like us to focus their research efforts on the observations and feedbacks that we receive. As a result, the majority of our products are directly derived from the needs of our end-users.
The company’s financial performance has also been impressive, the share price now sits approximately 80% higher than in the year 2012, currently at approximately 1,100 yen per share. What do you believe have been the key drivers behind such excellent growth?
I think that the most powerful growth engine is Nipro’s efforts targeted towards increasing product competitiveness and modifying and developing such products that are more attractive to the users than other companies.
The company’s vision is “to become a truly global comprehensive health care company.” How are you hoping to expand the trinity business model on a global level?
We plan on continuing our efforts towards improving our product competitiveness within the domestic market, but also developing products based on the unique needs of each individual market taking advantage of our sales bases which have been expanded across the world. For instance, I believe our pre-filled syringe product is very representative of the integrated properties of the trinity businesses. In this product, which is comprised of glass, rubber parts and pharmaceutical product, the glass syringe containing two pharmaceutical products is made into its final product through mixing within, immediately before use. Also, we offer some products that are manufactured as generic only by Nipro. Thus, we take pride in the fact that Nipro is the pharmaceutical company with the ability to commercialize products as a system based on the trinity policy.
A product manufactured as a system is demanded worldwide and therefore we would like to operate based on the trinity policy on a global scale.
The global prefilled syringes market accounted for $3.9 billion in value in 2014, and it is expected to grow with a CAGR of 12.9% during 2015-2020. How well positioned is Nipro to benefit from this forecast growth?
I believe that we should be seeing an increased number of pre-filled syringe products across the market supplied by us in the near future. We have acquired a medical glass manufacturer in Europe in 2012, aiming to capture a substantial share of the global market. The widespread usage of pre-filled syringes will contribute to taking infection control measures and reducing the number of medical accidents, as it grossly reduces the number of processes that occurs prior to being injected into the patient. I mention this specifically because there have been medical accidents surrounding syringe usages and the injection of pharmaceutical products contained in vial containers into the syringes at clinics until about 10 years ago in Japan. Furthermore, this product will reduce the number of tasks for people who work in the medical field and thus, I think it is important to deliver this product further into the market in order to alleviate the enormous workload of that nurses experience in hospitals today.
In fiscal 2015, net income totaled ¥12.5 billion, an increase of 335.8% over the previous fiscal year. The medical related industry however has faced a challenging business environment with a downturn in demand due to the consumption tax hike. What in your view needs further attention in terms of deregulation and or competition laws?
As most people know, Japan experienced the Great East Japan Earthquake in March 2011. The local medical treatment facilities in the tsunami-devastated regions had suffered a huge damage. We at Nipro thought that we, as a healthcare company, needed to provide emergency medical aid supplies as soon as possible through collaboration with local medical experts and cooperation with transport operators in order to fulfill our responsibility to supply medical equipment and pharmaceutical products. However, at that time, many permitting processes for means of transportation and delivery of supplies to the devastated area and others were legally required the same way as they are at ordinary times, which sometimes posed obstacles to our actions.
As a result, from the experience our company had during March 2011, I believe it is necessary to have special legislation that is to be applied only to times of natural disaster from the viewpoint that human life should be respected under the emergency situations caused by natural disasters.
Can you take us through the ways in which you try to foster a culture of innovation at Nipro?
Whenever we receive orders for custom-made products from our users – ranging from doctors, nurses, and technicians – we strive to make efforts to respond to all of them, especially those with fresh needs that we have never encountered, even though they are costly challenges. Initially, these newly developed products do not generate good sales figures due to their high associated costs, but I believe it is possible to innovate the product from the users’ perspectives and transform it into a form that will meet unsatisfied demands of end-users and make our products attractive to a large number of users.
The US is the largest healthcare market in the world by some margin and of course represents a market with enormous growth potential for Nipro; you recently entered into an agreement with Infraredx in the US to ideally expand your vascular portfolio there. What importance does this deal have on your ambitions in the US?
I believe the US, especially areas like Silicon Valley, is very competent in developing new product technology in a short period of time, and thus I intend to seek and expand upon collaborative relationships with venture capital organizations in the US. I see a lot of potential in the US market. I already have plans for expanding Nipro’s existing sales network across the US where we already have our production and sales bases as well as introducing the Nipro training centers model that we already operate in Japan in both the US and Europe.
How are you looking to further utilize M&A as an appropriate model for boosting your growth prospects over the medium term?
The M&A model that I envision as of now is all for the purpose of complementing or supplementing the operations that we have at Nipro. I am always enthusiastic in going forward with an M&A so as long as it produces synergy between Nipro and the acquired company. For instance, the acquisition of Infaredx was not only for the purpose of simply expanding our revenues, but also was undertaken because we understood that the technology that Infraredx can offer combined with Nipro’s technology, with the ability to produce new value-added products, would most certainly provide us with great synergy.
How do you aim to communicate your company’s brand and capabilities globally?
The healthcare and pharmaceuticals industry has a multitude of facets, especially those based on the various professions within the field. Nipro tries to target all audiences and customers by actively displaying our products through exhibitions across the US, Europe and emerging countries, as well as releasing publications, attending symposiums – basically all events that allow us to communicate ourselves.
As we run up to your fourth year as president at Nipro, what is your long-term vision for where you wish to guide the company?
The healthcare industry is said to grow at 7-8% per annum; our goal is to grow while consistently beating this number. If we can grow at this pace, our goal of reaching 500 billion yen in sales revenue by 2020 and 1 trillion yen by 2030 must be met. Our sales is increasing steadily – at this pace, we are almost guaranteed to meet our 2020 target. As for our 2030 target, I believe our fields of operations as well as activities in global markets still require further expansion.
Would you like to leave a final message?
Currently, it is said that there is approximately a 10-year discrepancy between the healthy life years and life expectancy for Japanese people. Nipro is constantly striving towards extending the healthy life years of people around the world as we believe that it is essential to ensure that we offer not only means of treatment to live longer, but go a step further by offering the means to live a happier and ever-healthier lives. I hope that the readers would positively support our will to achieve this goal and keep a close eye on our much further efforts in the future.