Business Risks

The Meiji Group recognizes that risk management is not just for responding when emergencies or disasters occur and they severely impact business activities. It is also important for taking measures that help to control and mitigate/avert risks.

Risk Management System

The Meiji Group has established a risk management structure that promotes further growth to realize Meiji Group 2026 Vision. We can perceive overall Group management risks, reduce risks, and engage in appropriate risk-taking through this risk management structure.
In April 2021, Meiji Holdings Co., Ltd. established Risk Management Department and strengthened the Group overall risk management. Our Executive Committee and Board of Directors evaluate and confirm management risks aligned with our Group Vision. Thus we can manage risks adapting to changes in our operating environment.
Following this approach, we have developed risk management systems that are suited to the Food and Pharmaceutical businesses. We have created systems for quickly sharing risk information, which includes risks common to all our businesses and risks that impact on the whole Group, and we strive to identify, evaluate and treat risks promptly.

Business Management Risks

We appropriately identify risks from the Group-wide business management perspective, and we develop countermeasures according to the impact of those risks. In this way, we not only minimize risks, but we also achieve sustainable growth and gain new growth opportunities. We have identified the Meiji Group Business Management Risks according to three Visions: Business Vision, Sustainability Vision and Management Vision, outlined the Meiji Group 2026 Vision.
Of matters indicated in our securities report in relation to the status of operations and accounting, the management recognizes followings (shown in the tables) as major risks that have the potential impact on the financial position, operating performance, or cash flows of consolidated results significantly.
Future risks outlined in the following tables are categorized based on our medium- and long-term management strategy. Risks are assessed taking into account the likelihood of occurrence and the level of impact on the Group.
◎ : Risks of greater importance

The information represents risks recognized by the Group as of the date of submission of the securities report. These risks are not comprehensive representation of all risks related our businesses.

Business Risks

Risks Countermeasures Change in risk recognition from previous year Importance
to the
Group
Sale and supply of products and services
  • Abandon to launch planned product
  • Changes in customer lifestyles and values
  • Negative rumors about the Meiji Group’s core materials (milk, cocoa, etc.)
  • Establish solid Proofs of Concept (POC)
  • Gather information on market trends
  • Develop products that are friendly to the environment and society
  • Create products and services unique to Meiji that address social issues
  • Appropriately disseminate relevant information about products and materials
The majority of profits comes from specific products
  • Sluggish sales of products that account for a considerable portion of sales and profits
  • Implement promotions that maximize unique value
  • Improve product portfolio management
  • Explore new markets and new business domains
Supply chains
  • Insufficient or excess procurement or price increases of raw materials
  • Difficulties in procuring raw milk
  • Cessation of production due to production problems, etc.
  • Unstable product supplies due to distribution problems
  • Gather information on raw materials markets and promote procurement strategies
  • Diversify suppliers and consider alternative materials
  • Strengthen coordination between production and sales divisions
  • Improve distribution efficiency through labor-saving/automation
Technological advances
  • Rapid advances in digital technologies
  • Discovery of innovative treatment methods, manufacturing methods and formulation methods
  • Consider introducing new technologies as early as possible
  • Research new manufacturing and formulation methods, and search for alliances
Laws and regulations
  • Revisions that significantly impact corporate activities
  • NHI drug price revisions
  • Obtain information about system revisions early and implement countermeasures
  • Make appropriate approaches to relevant government authorities
  • Expand portfolio of products that are not affected by NHI drug price revisions
Overseas expansion and overseas Group companies
  • Rapid changes in society, or outbreaks of war or terrorism
  • Revisions of the systems that greatly exceed expectations in various countries
  • Gather information, and investigate and implement countermeasures early
  • Create product supply systems from multiple locations
Business plans, etc.
  • Failure to achieve the Visions or Medium-Term Business Plans due to change in business conditions
  • Growth slowdowns in Core Business, or failure to achieve targets for overseas markets or new business domains
  • Impairment losses on non-current assets or goodwill
  • Fluctuations in foreign exchange or interest
Enhance unique value and search for new value
  • Provide unique value in overseas markets
  • Manage business portfolio from the perspectives of profitability, growth and productivity
  • Make decisions and monitor investment and M&A plans appropriately
  • Use foreign exchange contracts and borrow at fixed interest rates

Sustainability-related Risks

Risks Countermeasures Change in risk recognition from previous year Importance
to the
Group
Caring for the Earth
  • Respect for the environment in corporate activities
  • Reduce CO2 emissions and prevent fluorocarbon leaks, switch to renewable energies, appropriately treat wastewater and industrial waste, and conduct initiatives in compliance with ISO 14001
  • Manage supply and demand, and decrease food loss
  • Comply with policies related to the environment
Climate change
  • Address climate change
  • Analyze climate change scenarios according to the TCFD framework, formulate strategies and release information
A Richer Society
  • Sustainable raw material procurement
  • Consider human rights, and human rights issues
  • Understand diversity, and use a diverse workforce effectively
  • Increase the ratio of sustainably procured raw materials, such as cocoa beans and palm oil
  • Strengthen cooperation and collaboration with dairy farmers and other suppliers
  • Address challenges of human rights based on due diligence
  • Create organizations and cultures that value diverse perspectives and abilities
  • Comply with policies related to procurement, human rights and society, etc.

Management-related Risks

Risks Countermeasures Change in risk recognition from previous year Importance
to the
Group
Governance
  • Make business decisions in a timely and appropriately manner
  • Internal or external non-compliance
  • Improve effectiveness of the Board of Directors
  • Enhance corporate governance systems
  • Provide education on compliance and social media usage, and comply with internal and external policies
Damage to the Meiji brand
  • Product recalls or withdrawals from the market due to quality defects or unexpected side effects of pharmaceuticals, etc.
  • Unexpected harmful rumors about the Meiji Group or its products
  • Pursue quality and safety
  • Communicate appropriately with each stakeholder
Human capital and culture
  • Recruit and develop human capital required for corporate growth
  • Employee engagement
  • Effects of business environment on productivity
  • Appropriately implement succession planning
  • Improve employee training
  • Enhance employee engagement
  • Enhance health and productivity management and create comfortable work environments
Information asset leaks
  • Information leaks and system shutdowns due to unauthorized access, etc.
  • Data breaches due to inappropriate system management
  • Strengthen information management systems and information security
  • Strengthen education on information management and comply with regulations and policies
Disaster, emergency or other unforeseen circumstances
  • Temporary or full suspension of business operations due to disasters, pandemics or other unexpected emergency
  • Increases or decreases in product demand due to changes in business conditions in an emergency
  • Develop business continuity plans and risk management plans for swift recovery
  • Maintain a broad product portfolio across the Group

There was an incident that hypnotic substance was contaminated in Itraconazole tablets manufactured by Kobayashi Kako Co., Ltd. and sold by Meiji Seika Pharma Co., Ltd. Meiji Seika Pharma stopped shipments of such products and instituted a voluntary recall. The Meiji Group works to confirm and enhance the reliability assurance structure applied to contract manufacturers and development partners.
We will fulfill our product supply responsibilities as a manufacturer of essential foods and pharmaceuticals. To achieve these responsibilities, we are working to improve workplace hygiene and establish safe and secure work environments at all manufacturing facilities in Japan and overseas. Due to the COVID-19 pandemic, we are seeing dramatic changes in our business environment: increase in prevention awareness and health consciousness, the significant expansion of e-commerce, workstyle changes, and decrease in numbers of outpatient visits to medical institutions. We will continue to fulfill our responsibilities to ensure a stable supply as Food and Health professionals. Also, we will try hard to develop and launch vaccine against COVID-19, and propose products that match people’s needs living with COVID-19.