Matsudo, Japan: Japan’s largest drug store chain, Matsumotokiyoshi Holdings, said on Monday it plans to add 200-300 billion yen ($2.2-$3.3 billion) in annual revenue by acquiring smaller rivals by the end of the next financial year.
That would be an up to 75% jump in the firm’s sales, which it forecast would likely be 400 billion yen for the year ending in March 2010, up 2% from the previous year.
Japan’s $57 billion drug store industry faces a growing threat from new entrants following pharmacy deregulation earlier this year that paves the way for convenience stores and supermarkets to sell most over-the-counter medicines including cold medicines and aspirin.
The company has said it targets 1 trillion yen in revenue and 2,000 stores by the end of the year ending in March 2016.
“Our M&A targets include those with sales of over 100 billion yen,” company CEO Namio Matsumoto said in an interview with Reuters, adding that these companies would most likely be listed.
He said some acquisitions are likely to be announced this year, although he declined to be more specific, citing ongoing negotiations.
There are about a dozen listed drug store chains that have annual revenue of 100 billion yen and over, including Kirindo and Allied Hearts Holdings.
Started as a mom-and-pop pharmacy on the outskirts of Tokyo in the 1930s, Matsumotokiyoshi, widely known as “Matsukiyo”, has built itself into a formidable national chain through aggressive store openings and acquisitions, running about 980 stores, including franchised ones.
Matsumoto also said the chain plans to accelerate its store openings from the financial year that will begin in April next year, saying it is eyeing a net increase of 40-50 stores per year.
The company had put the brakes on store increases in recent years, scrapping unprofitable outlets.
“We will be actively opening stores and we expect to get some good real estate deals on locations,” he said.
He said the company has no plans to open stores overseas in the immediate future, though local businesses are approaching it for potential partnership.
“We have to solidify our operation in Japan, building it to the scale of 1 trillion yen (sales) first,” he said. “We have been approached by businesses in South Korea and Taiwan to do joint ventures, but we should focus (on Japan) for now.”
In Japan, only licensed pharmacists had been allowed to sell drugs, but new regulations require much less rigorous qualifications for selling most OTC medication, ushering in competition from industry outsiders.
Last month, Matsumotokiyoshi said it would jointly open stores with Japan’s No.2 convenience store chain, Lawson Inc, selling drugs and cosmetics in addition to convenience store mainstays like boxed meals.
Lawson said it hoped to jointly open 1,000 stores in five years.