A Discussion between the President and an Outside Director

In the coming century, we will continue contributing to "Tastiness and Enjoyment" and "Health and Reassurance."

We have prospered for 100 years by taking on a variety of challenges while always remaining "customer-based."
We are grateful to our predecessors and customers.

Sanuki: In fiscal 2016, the Meiji Group is celebrating its centennial. It is estimated that 98% of companies fail to survive more than 50 years. However, the Meiji Group is one of the select 2%, which is a significant achievement. What do you think has been the secret to your longevity?

Matsuo: Our predecessors thought scientifically and had the ambition to take on a variety of challenges. As a result, we have developed a range of different businesses. We began with confectioneries, dairy products, and foods and then expanded into the pharmaceuticals business. The Meiji Group is "customer-based"; in other words, we always consider things from the customer's standpoint. I am grateful that our predecessors focused on challenges to benefit customers.

Sanuki: The Meiji Group has maintained a philosophy of contributing to the health of people of all ages, from infants to the elderly, while creating innovative products and value.

Matsuo: Our innovation stems from a "customer-based" approach. We identify and cater to society's needs in a timely manner. Today, the population is aging in Japan. In response to this aging society, we will develop products that satisfy customers' growing health consciousness.

Profile

Yoko Sanuki, Outside Director
Attorney at Law, NS Sogo Law Office

Admitted to the Bar in April 1981 (Daini Tokyo Bar Association) Appointed as an outside director in April 2009, Ms. Sanuki provides opinions and advice based on extensive experience as an attorney and a high degree of expertise in corporate law.

We are grateful to our predecessors and customers.

Trust from customers is an irreplaceable asset. We will continue contributing to the health of people of all ages, from infants to the elderly.

Matsuo: After World War II, we entered the pharmaceuticals business by producing penicillin with the help of the United States. Initially, we applied fermentation technology from our food business to produce penicillin. At the time, tuberculosis and other infectious diseases were a serious problem in Japan. Society needed antibacterial drugs to address this problem.

Sanuki: Each era requires different drugs.

Matsuo: Different diseases cause problems in each country. Infectious diseases need to be addressed in Asia and Africa. Meanwhile, antibiotic resistance has become a serious problem in the West. As our progress has been linked with antibiotics, we have to address antibiotic resistance issues. In addition, I want to focus on the central nervous system (CNS) disorders field. More people will suffer from depression as the number of people with stress and the number of elderly people rise. We aim to tackle this problem as well.

Sanuki: The Meiji Group was one of the first manufacturers of generic drugs among brand-name drug companies in Japan. I think this speaks to our willingness to take on new initiatives. Further, we are trying to develop drugs for rare diseases that affect children, such as Dravet's syndrome.

Matsuo: Dravet's syndrome is an intractable form of epilepsy, and medical institutions were urgently calling for the development of a drug. Meiji Co., Ltd., has garnered a favorable reputation among professionals in the infant-care field because it manufactures and supplies special milk for infants who cannot drink breast milk or infant formula due to inborn errors of metabolism. When Meiji Seika Pharma Co., Ltd., assumed the development of the drug for Dravet's syndrome, doctors thanked us and offered their full support. As Dravet's syndrome is a rare disease, the number of patients is small. Similarly, few infants require special milk. Although these initiatives do not produce short-term profit, we tackle them for children suffering from diseases and the families of these children as part of our social mission.

Sanuki: The number of patients is extremely limited. So, rather than focusing on immediate profit, the Group's aim is to benefit society.

Matsuo: The Meiji Group's philosophy is to provide tastiness and contribute to the well-being of people of all ages, from infants to the elderly. All of our products—dairy products, confectioneries, foods, and drugs—are marketed under the meiji brand. Using meiji brand cultivates our reputation and earns society's trust. Consumers cannot tell if a drug is effective just by looking at it. Therefore, whether the manufacturer and its data are trustworthy is critical. Trust from customers is an irreplaceable asset.

Trust from customers is an irreplaceable asset. We will continue contributing to the health of people of all ages, from infants to the elderly.

In-house systems alone cannot prevent product incidents.
Employees' commitment to ensuring safety, reliability, and quality is essential.

Sanuki: If a product incident occurs, companies can lose everything they have accumulated at a stroke. I think the Meiji Group takes very stringent quality assurance measures. Therefore, the Group has not had any major product incidents and continued for 100 years.

Matsuo: Our basic policy is to take a "customer-based" approach and provide high-quality, safe, and reliable products. However, we cannot eliminate incidents simply by establishing strict in-house systems. Ultimately, heightening employees' commitment to safety is necessary.

Sanuki: I agree. It comes down to people in the end. I think this is very important.

Matsuo: Because all of our products are ingested, employees must have a shared commitment to ensuring reliability.

Sanuki: When I took a factory tour, I was impressed by how well-organized everything is. On the factory premises, employees check if it is safe when they cross roads. I think that such habits have become employees' daily routine. Moreover, I believe that, rather than following supervisor's instructions, employees have set standards by themselves and follow them.

Matsuo: You are right. It is important for all employees to understand, follow, and realize the Group's philosophy.
Taking suppliers into consideration is important.
We conduct fair and equitable business activities globally based on respect for human rights.

Matsuo: In globalizing our businesses, fair and equitable business activities are required. Avoiding violations of human rights, such as discrimination, harassment, and child labor, is of particular importance. Also, it is necessary to establish safe, employee-friendly workplaces. Suppliers should have a similar zero-tolerance approach if possible.

Sanuki: The Meiji Group Policy on Human Rights prohibits forced labor and child labor. The monitoring of overseas suppliers by the Group has convinced me of its sincerity in this regard.

Matsuo: Although banning child labor is a matter of course in Japan, in many countries this is not the case.

Sanuki: I think your support for cocoa farmers in Ghana is an excellent initiative. While providing technical support for cocoa cultivation and securing supplies, the Group is helping to improve farmers' daily life.

Matsuo: Demand for cocoa beans is rising worldwide, so we should think about securing sustainable supplies. In Thailand, our alliance partner CP Group is engaged in all stages of business activities, from raw material procurement through to sales to customers. Such integrated efforts will be a good example for us in future, when procurement difficulties are anticipated.

We want to make the Meiji Group a corporate group in which female employees fully realize their abilities.

Sanuki: In the Meiji Group, female employees work in a wide range of areas. Regrettably, however, the percentage of female managers is low.

Matsuo: It may take a little time to increase the percentage of female managers. There is a fairly high proportion of female assistant managers now. Therefore, in 10 years' time the percentage of women in senior managerial positions is likely to rise.

Sanuki: The Group is taking various measures to empower women. These include offering overseas training programs for women, holding conferences for female employees, and using the Group's intranet to showcase role models and heighten awareness. Do you think there are opportunities for women to become general managers of factories?

Matsuo: Yes, I think there are. In some global companies women work as the general managers of factories. So, I do not see any reason why we cannot do the same. Promoting capable personnel, regardless of gender, is common sense.

Sanuki: Almost all the members of the Meiji Group's Executive Committee are men. I get the impression that there are few women in managerial positions at operating bases.

Matsuo: I want to improve this over time. Without a doubt, having women play more significant roles will have a positive effect on us. Companies, as well as the country itself, cannot function without the contributions of women.

As we globalize, we must heighten the transparency of governance even further.
Good governance ensures appropriate decision making.

Sanuki: At the end of March 2016, the Group had 4,801 employees overseas, which represents 36% of the total workforce. The Group is global in name and in practice. With this in mind, governance has to become concrete.

Matsuo: I agree. We should listen carefully to outside opinions to avoid thinking that is self-serving or narrow. Transparent governance is necessary for appropriate decision making. In this regard, I am very grateful to be able to benefit from your opinions as an outside director.

Sanuki: I sense the Meiji Group's corporate culture is earnest and respects tradition.

Sanuki: How far do you think the Meiji Group's globalization will have progressed in about 30 years from now?

Matsuo: I think by then overseas operations will account for around half of our sales. If this happens, overseas employees will account for a large part of the workforce. I want us to be a group in which diverse people work together and respect each other.

We will provide tastiness and contribute to well-being worldwide.
With humility, we will work steadily and patiently to develop over the next 100 years.

Sanuki: My personal dream is for meiji products to be widely available around the world. I would like to see the Group's foods and drugs bring tastiness and health to people everywhere.

Matsuo: Our aim is to provide tastiness and contribute to the well-being of people of all ages worldwide. The Meiji Group has been able to continue for 100 years thanks to steady, patient efforts. With humility, we want to continue sincere, steady efforts to remain closely in tune with our customers and develop over the next 100 years.

With humility, we will work steadily and patiently to develop over the next 100 years.