New Mid-term Plan “Transform! 2020”
（from April 2017 to March 2020）
I. Background of the Mid-term Plan “Transform! 2020”
In May 2014, the Group established the Fourth Mid-Term Plan (four-year plan for the fiscal year ending March 31, 2018) with the aim of further strengthening our domestic and international competitive ability as well as to accelerate the growth of our global operations. Also, the Group has been implementing various measures based on the mid-term plan.
Over this period, the Group has focused on building global business foundations and entering markets in the U.S. and emerging countries for geographical expansion of our LUMIPULSE business, which is a key product in our In Vitro Diagnostics (IVD) business. Some measures have shown positive results, including progress in developing new testing services in the domestic Clinical Laboratory Testing (CLT) business. However, expected results for priority measures were not obtained because of termination of development of the IT system (Navi-Lab) according to the decision to migrate to a comprehensive clinical testing services system with higher priority to customer needs and a slowdown in the overseas CLT business expansion due to drops in prices for U.S. pathology testing services. As a result, consolidated net sales for the fiscal year ended March 31, 2017, which is the third year of the mid-term plan, were JPY204.25 billion, and operating profit was JPY28.06 billion. These results are lower than the expected mid-term plan target forecasts (net sales of JPY246.0 billion and operating profit of JPY34.0 billion for the fiscal year ending March 31, 2018).
Growth in the clinical testing industry has slowed due to controls on medical expenses and the slowdown in the economic growth of developed countries, while the business environment has been changing day by day, thanks to new growth opportunities such as the advance of an aging society, expansion of the domestic general practitioner market, economic growth in emerging countries and advancement in medical/information technology. Under such circumstances, the Group decided to conduct a comprehensive review on growth and geographical strategies for each business division based on priority measures for achieving dramatic and sustainable future growth. In the mid-term plan "Transform! 2020", the Group revised its corporate policy and established its new Group message. This mid-term plan is the first mid-term plan of the "redefined Miraca Group”, and for this reason, this mid-term plan was named "Transform! 2020." To achieve dramatic growth in the medium and long term for the Group, we will leverage the synergies gained from a single unified group, develop a growth foundation, and focus on reform of the organizational structure and operations. In addition, at the same time, the entire Group will work to realize the priority measures in this mid-term plan, namely, “Enhancing existing businesses”, “Enhancing R&D”, “Enhancing global expansion”, and “Promoting alliance strategies” as a single unified group.
Position of “Transform! 2020”The Second Start-up
- Renewal of Management Philosophy, launch of Miraca Statement
- Create operational base for significant and sustainable growth in/after FY2020
Ⅱ.Mid-term Plan "Transform! 2020"
An overview of this mid・term plan "Transform! 2020" is presented below.
1. Management numerical targets (consolidated) for fiscal year ending March 31, 2020
|Units: Billion yen
March 31 2017
March 31, 2020
|ROE（*3）||0.2%||10% or more|
|ROIC（*4）||9.5%||8% or more|
*1 CAGR：Compound average growth rate. CAGR after the revision is calculated based on the results of fiscal year ending March 31, 2017, subtracting the results of MLS.
*2 EBITDA ＝ Operating income + Depreciation + Amortization of goodwill
*3 ROE ＝ Profit (loss) attributable to owners of parent / Yearly average of Equity
*4 ROIC ＝ Net operating profit after tax (NOPAT) / Invested capital
NOPAT ＝ Operating income - Estimated effective income tax
Invested capital ＝ Yearly average of [Net assets + Interest-bearing liabilities (incl. lease obligation) + Other fixed liabilities]
2. Overview of priority measures of the mid-term plan "Transform! 2020" and plans by business segments
- a)Proactive Investment Into in-hospital Testing Business
- For in-hospital testing, we aim to capture new customers by enhancing our proposal-type sales based on standardized operation packages because higher demand for efficient operation is expected. Also, in the subcontracting of in-hospital testing, we will strive to establish stronger interactions with medical institutions for further enhancing our strength in the out-of-hospital esoteric testing field.
- b)Penetration into the Domestic General Practitioner (GP) Market
- In the Tokyo metropolitan area, we will accelerate penetration into the GP market by taking advantage of improvements in our service level and enhanced sales capabilities through sharing of expertise and tools in the market development within the Group. Also, we are proceeding with the establishment of satellite laboratories for reducing TAT while also streamlining the collection and distribution processes. In the Osaka metropolitan area, we will accelerate market development collaborating with Japan Clinical Laboratories, Inc., which is one of our Group companies.
Further, based on current market needs, we have started consideration on a comprehensive central laboratory for providing high-quality testing services efficiently and at low cost.
- c)Penetration into the Domestic Medical Checkup Market
- We are increasing our share in the medical checkup market by providing a blood draw platform with enhanced convenience while providing solutions to meet needs for higher efficiency of operations from company health insurance unions.
- d)Development of New Testing Services
- While proceeding with development in new fields such as testing services using next-generation sequencers, which are growing in demand, and mass spectrometry applied technology, we are collaborating with people in medical agencies and in KOL to speedily develop the most advanced testing services before competitors for ensuring that we solidify our strength in the esoteric testing field.
- a)Expansion of Domestic Market Share of LUMIPULSE Business
- Increased demand is expected in Japan due to replacement of large-sized instruments. Thus we will improve our sales capabilities and push up instrument installations while also introducing device improvements and developing and improving our reagent test lineups for ensuring the superiority of our LUMIPULSE L2400.
- b)Global Expansion of LUMIPULSE Business
- In Europe and other regions where our sales organization is already built, we will accelerate development of items compliant with the medical needs of each country and expand our market share.
In India and other emerging countries, priority will be determined after considering the difficulty in obtaining regulatory approval for each country for maximizing the speed of geographical expansion by entering markets using the LUMIPULSE G600 II as our strategic product.
- c)Building a Global Sales Channel through Alliance with Other Companies
- With reviewing the current results and issues of our global expansion, we will establish sales channels in cooperation with other companies to enable LUMIPULSE products to speedily penetrate into the global markets.
- d)Development of Next-generation Platform
- We will aggressively invest management resources in R&D for developing a comprehensive next-generation platform.
- 1)Sterilization Business
- To realize sustainable growth, we will implement automation and standardization of operations and focus on staff fostering and business restructuring.
- 2)Clinical Trial Support Business
- We are currently transforming our business structure which depends on clinical trial testing for new pharmaceuticals, and we are positioning the clinical research support business as a driver of future sales growth for capturing new markets and attaining growth.
In basic research fields, research activities that were formerly conducted by each subsidiary will become centralized, and a new Miraca Research Institute will be established. Seeds produced from an enhanced fundamental research system at the Group and stronger collaboration (open innovation) with group companies and outside agencies will lead to development of products and services that can serve as future drivers of growth.
Also, in the IVD business, we are working to quickly develop and improve new test items for LUMIPULSE products, submit the regulatory applications needed for global expansion, and develop a next-generation platform.
For profits produced from each business, the standard consolidated dividend payout ratio is 50% or more of profit attributable to owners of parent excluding special factors such as extraordinary income/losses and is paid out as a dividend to shareholders.
In addition, retained earnings are allotted with priority to investments in medium- and long-term growth.