Business Risks
Among the matters concerning our business situation and accounting situation described in the securities report, the items that may have a significant influence on investor judgment are as follows:
Matters in the text concerning the future are those judged by the Group as of the end of the current consolidated fiscal year.
Regarding legal regulations
About the Qol Group's Businesses
In the Qol Group's Insurance Pharmacy Business and BPO Business, we are regulated by laws such as the "Law on Securing Quality, Efficacy and Safety of Products Including Pharmaceuticals and Medical Devices (hereinafter referred to as "PMDL")," the "Health Insurance Act," and the "Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers." If we are unable to receive the permission, registration, designation or license of each prefecture, etc.; if we violate related laws or regulations; or if laws and ordinances are revised, etc., the Group's business performance may be affected.
| Differences in permissions, registrations, designations, and licenses | Expiry date | Related laws and ordinances | Issuer of registrations, etc. |
|---|---|---|---|
| Permission to open a pharmacy | 6 years | PMDL | Each prefectural governor |
| Permission to sell or lease highly controlled medical devices, etc. | 6 years | PMDL | Each prefectural governor |
| Designation of an insurance pharmacy | 6 years | Health Insurance Act | Director General of each Regional Bureau of Health and Welfare |
| License of a drug retailer | 1 to 2 years | Narcotics and Psychotropics Control Act | Each prefectural governor |
| Permission to manufacture and sell pharmacy products | 6 years | PMDL | Minister of Health, Labour and Welfare |
| Designation of a medical institution designated by the Public Assistance Act | 6 years | Public Assistance Act | Each prefectural governor |
| Designation of a medical institution for atomic bomb survivors’ general diseases | Indefinite period | Atomic Bomb Survivors' Assistance Act | Each prefectural governor |
| Designation of a designated medical institution for tuberculosis | Indefinite period | Tuberculosis Control Act | Director general of each prefectural Labor Bureau |
| Designation of a designated industrial accident insurance pharmacy | Indefinite period | Industrial Accident Compensation Insurance Act | Each prefectural governor |
| Designation of a designated medical institution for services and support for persons with disabilities | 6 years | Services and Supports for Persons with Disabilities Act | Each prefectural governor |
About Securing Pharmacists
In the insurance pharmacy business, dispensing by persons other than pharmacists is forbidden under Article 19 of the Pharmacists Act. In addition, it is stipulated that one pharmacist must be placed per 40 average daily handled prescriptions, based on the ministerial ordinance that establishes a system for conducting pharmacy businesses, store sales businesses, and placement and selling businesses.
Therefore, if the number of new pharmacists required cannot be secured due to a decrease in the number of newly hired persons and an increase in the number of retired persons, the Group's business performance may be affected.
About the Business Environment for Insurance Pharmacies
About Trends in the Separation of Dispensing from Medical Practice
The separation of dispensing from medical practice has been promoted as a national policy, whereby medical institutions and insurance pharmacies divide their work between specialized fields, respectively, to improve the quality of national medical care. If this trend changes in the future, the Group's business performance may be affected.
About Drug Price Revisions and Medical Fee Revisions
Pharmacy sales are made up of drug revenues and technical revenues, and drug prices and medical fees are stipulated by the Ministry of Health, Labour and Welfare. In addition, drug prices and medical fees are gradually revised in order to reduce national medical expenses. In the future, if revisions are made to drug prices or medical fees, or the drug price points or medical fee points are changed, the Group's business performance may be affected.
About New Store Opening Policy
As of the end of the current consolidated fiscal year, the Group operates 718 stores. The expansion of the number of stores has greatly contributed to the recent expansion of the Group's business.
Going forward, we will continue to expand the number of stores including through acquisitions, but if we cannot open new stores as planned due to the inability to secure new projects that meet our store opening conditions, the Group's business performance may be affected.
About Fundraising
Part of the Group's business funds is procured through borrowing from financial institutions. For this reason, there is a possibility that we will not be able to raise funds in a timely fashion under the conditions that the Group is seeking, due to economic recession, financial market deterioration, interest rate rise, the Group's creditworthiness, or deterioration of business outlook. Should the Group not be able to raise funds under favorable conditions in the future, its business performance may be affected.
About Dispensing Errors
In order to prevent dispensing errors, the Group takes various measures such as thoroughly educating employees, introducing a dispensing error prevention system, and gathering achievements on the company intranet. However, if a dispensing error occurs and the Group receives a lawsuit, payment of a large amount of damages or the accompanying loss of social credibility may affect the Group's business performance.
About the Use and Management of Personal Information
The Group holds a large amount of personal information in its business, which we manage appropriately. In accordance with the enactment of the "Act on the Protection of Personal Information" in April 2005, we have established a "Personal Information Protection Policy" that clarifies our basic policy on personal information protection as well as "Personal Information Protection Basic Rules" which set out basic items concerning handling of personal information. We are careful about protecting personal information and work to ensure that personal information is not leaked. In the event of leakage of personal information, the Group's social credibility will decline and liability for damages will be incurred, which may affect the Group's business performance.
About the Influence of Consumption Tax, etc.
In the insurance pharmacy business, dispensing sales related to social insurance medical treatment are tax-exempt under the Consumption Tax Act, while under the same act, purchases of pharmaceuticals are taxed. For this reason, the insurance pharmacy operating companies within the Group have the final burden of consumption tax, etc. and consumption taxes paid to suppliers are included in the cost of sales.
In the past, when consumption tax was introduced, and when the consumption tax rate was revised, such increases in the consumption tax rate were taken into account by making revisions to our drug prices. However, if the consumption tax rate is revised in the future and this rise is not reflected in our drug prices, the Group's business performance may be affected.
About Impairment of Goodwill
The Group is promoting a business strategy of expanding its business through M&A, etc. When we conduct M&A, etc. we thoroughly examine whether we can secure stable profitability in the future before making an acquisition, but if we cannot secure earnings as planned in the future, there will be an impairment loss related to goodwill, and the Group's business performance may be affected.
About Intellectual Property Rights
When the Group develops various services, we pay close attention not to infringe on intellectual property rights such as patents and trademarks owned by others, but in the unlikely event that we infringe the intellectual property rights of others, we may be liable for large damages.
In addition, although we pay close attention not to allow the intellectual property rights of our Group to be infringed, if we cannot grasp the infringement from others, or if we cannot respond appropriately, the Group's business performance may be affected.
About Other Restrictions
When the Group develops various services, it pays special attention to various regulations peculiar to the pharmaceutical industry, such as regulations on advertisement restrictions etc. under "PMDL" and "The Fair Competition Code concerning Restriction on Premium Offers in Ethical Pharmaceutical Drugs Marketing Industry" issued by the Fair Trade Commission.
In the future, although it is our policy to pay attention to various regulations as we manage our business, there is a possibility that laws or regulations from industry groups, etc. will be revised, abolished, or newly established in response to various developments in the industry. In the event that the Group is obliged to respond to any of these new developments, or if the Group cannot respond to them, the Group's business performance may be affected.
About Disasters etc
If unexpected fire, terrorism, war, epidemic, earthquake, abnormal weather, or the like occurs in an area where our businesses operate, and one or more of our stores is damaged, or the supply of goods to one or more of our stores is stopped, or if the operation of one or more of our stores is obstructed in any other way, the Group's business performance may be affected.