Many Japanese pharmaceutical companies have been languishing under low growth and profitability amid a "triple whammy" business environment. The number of companies with operating profit margins below 5% has surged to around three times that of 20 years ago, and the gap vs. global pharmaceutical companies continues to widen. Shareholder and investor confidence is low, and approximately half of the listed pharmaceutical companies in Japan have a Price-Book Ratio (PBR) below 1. Furthermore, further declines in stock prices create a risk of losing management control in the medium to long term.
Amid such circumstances, business leaders are expected to have to make even more difficult decisions as they steer their companies' futures, responding to changes in the business environment brought about by the COVID-19 as well as to changes in business models brought about by disruptive innovations such as generative AI. Through a series of radical structural reforms with clear near-term, mid-term, and long-term goals, CEOs and their leadership teams can respond to these market challenges and quickly achieve a step change in profitability while ultimately realizing the full potential of pharmaceutical companies in the long run.
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