Tsumura - Company History

Tsumura began in April 1893 as a one-man patent-medicine shop in Nihonbashi, Tokyo, trading as Chujoto Honpo Tsumura Juntendo. Tsumura Jusha, born into an old family in Nara, had come to the capital to commercialise a single thing: Chujoto, a women’s remedy handed down in his mother’s family, a decoction of several crude drugs whose name traced back to a temple legend in Nara. In an era when patent medicine, not the physician’s prescription, was the mainstream of Japanese pharmacy, one inherited formula was enough to build a national business on — and betting the whole company on one such formula became the pattern Tsumura would return to for the next century.

Jusha was also a merchant with a feel for publicity. Two years after founding he put up what is described as Japan’s first gas-illuminated shop sign on a Tokyo street, and he advertised Chujoto in the business press alongside Sankyo’s Takadiastase. Profits went straight back into advertising and plant: a Meguro factory from 1919, a nationwide trade by the mid-1920s. Then came the unusual part. In 1924 the shop opened the Tsumura Research Institute and a medicinal-herb garden, and from 1926 it published a botanical journal — a research base no ordinary patent-medicine seller had any reason to keep.

What paid for it was a different product entirely. Bathclin, an aromatic bath additive launched in 1930, became the company’s cash engine, and after the war — the head office burned out in the 1945 air raids, the business incorporated in 1936 and passed to the second Tsumura Jusha in 1941 — its high-growth-era sales were ploughed back into herbal research. The second Jusha later recalled the internal objection plainly: the laboratory was the president’s hobby, and why not put the money into Bathclin, which was actually making some. A profitable bath additive subsidising an unsellable herbal medicine was the structure that made everything after 1976 possible.

In September 1976 prescription kampo preparations were admitted to Japan’s health insurance and listed on the drug price schedule. It changed the company. Because these were medicines with centuries of recorded use, the Ministry of Health granted an exceptional route that waived clinical trials, and the window stayed open for about a decade. Tsumura Juntendo used it harder than anyone: 129 formulations approved in the eleven years from 1976. Once the exception closed, kampo needed the same ruinously expensive trials as any new drug while its reimbursed price kept being cut — so the investment could never be recovered, and new entrants effectively stopped coming. Holding more than twice the formulations of the second-placed firm is the whole basis of the 80%-plus share Tsumura still has.

The capital market followed. The company listed on the Tokyo Stock Exchange Second Section in November 1980 and moved to the First Section in September 1982; a new Ibaraki plant in 1983 absorbed both production and the research institute. By 1992 kampo was more than 80% of sales. A seller of patent medicine and bath salts had become a manufacturer of drugs that doctors prescribe.

Renamed Tsumura & Co. in October 1988, the company then did what almost every Japanese firm did in those years. Under Tsumura Akira, the third-generation president, the group spread into cosmetics, imported fine art and a US arm — and, more usefully, into Shenzhen in 1991, the first foothold of what would later become the China business. When the bubble broke, the cosmetics and US units alone had accumulated roughly $191.4M (¥18bn) of losses. In 1992 the second Jusha, by then chairman, used a Nikkei Business column to ask what the years of sales quotas and reward-for-expansion had actually left behind, and to argue for the unglamorous work of rebuilding basic strength — a warning from the founding family aimed squarely at its own group.

In 1995 Tsumura took a president from outside for the first time in its history: Kazama Hachizaemon, a Daiichi Pharmaceutical executive related to the founding family by marriage, who brought his lieutenant Yoshii Junichi with him. Their first job was not kampo but the wreckage around it — guarantees, loss-making subsidiaries, debt. However healthy the core business, the group’s credit could not recover until the bubble-era assets were unwound.

Then two blows landed at once. In 1996 Shosaikoto — at about $183.9M (¥20bn) a year the largest product inside a kampo business worth roughly $735.5M (¥80bn) — was linked in press reports to interstitial pneumonia, and its sales fell by nearly 40%. In the same year the former president, Tsumura Akira, was arrested on charges of aggravated breach of trust, and the damage to the company’s name reached the consumer shelf as well. The art-import subsidiary’s wind-up produced a $79.3M (¥10bn) extraordinary loss in the year to March 1997 and the first bottom-line loss since listing. A further downgrade and a revised restructuring plan followed in February 1997, with 500 jobs to go by 2000.

What finished the rebuild was not the balance sheet. Yoshii, put in charge of the pharmaceutical sales organisation in 1997, concluded that selling kampo medicines was the wrong object: doctors trained in Western medicine do not prescribe what they cannot explain. So Tsumura went round the problem and worked on the teaching instead, until all 80 Japanese medical schools taught kampo. In parallel it set out to explain why the medicines work — joint research with Hokkaido University showed that Rikkunshito promotes secretion of the appetite hormone ghrelin, which carried the drug into surgical oncology, a field that had never prescribed kampo. Tsumura named the method ikuyaku, “growing the drug,” and made it the basis of sales strategy from 2005: in a category with no new molecules and a price that only falls, the way to grow is to widen the proven uses of what you already sell. Yoshii became president in 2004, the first with no blood tie to the founding family in the company’s 111 years.

In August 2008 Tsumura sold Tsumura Life Science, the household-products subsidiary that carried Bathclin, for about $44.5M (¥5bn) in what was effectively a management buy-out. The bath additive that had financed the herbal laboratory since 1930 was let go so that capital could follow the prescription business, then growing past $967.8M (¥100bn) and rather faster than that in volume terms once price cuts are stripped out.

A pure-play, though, is exposed on exactly the axis it has chosen. When a government review floated removing kampo from insurance cover in autumn 2009, the share price fell hard; 920,000 signatures from doctors and patients kept the cover in place, and the market learned what it means for one company to supply more than 80% of a reimbursed category. On the supply side, with over 80% of crude drugs sourced from China, Tsumura began from 2008 to build traceability across roughly 20,000 contract farms — cultivation methods and pesticide records — and in 2009 set up a Hokkaido operation to expand domestic growing.

Under Kato Terukazu, president from 2012, China stopped being only a place to buy. A capital and business alliance with the insurer Ping An Insurance in 2017 made a Ping An subsidiary Tsumura’s largest shareholder (10.06% as of March 2025); the joint venture Ping An Tsumura followed in 2018, and in 2023 it took full ownership of a traditional-Chinese-medicine maker founded in 1918, entering the finished-TCM business. The arithmetic is the argument: TCM is about 26% of China’s drug market against kampo’s under 2% in Japan, in a country expected to have more than 400 million people aged 65 or over by 2035.

The long headwind of falling prices finally turned in April 2024, when 66 formulations were repriced upward as unprofitable products. The year to March 2025 set records — sales of $1.2B (¥181bn) and operating profit of $268M (¥40bn), up $134.3M (¥20bn) on the year — and by the end of that fiscal year 50.4% of Japanese doctors used ten or more kampo formulations. Sales reached $1.2B (¥193bn) in the year to March 2026. A company that started by selling one inherited remedy now proposes to buy Yomeishu Seizo, the medicinal-liquor house, and is turning itself into a Japanese-and-Chinese business built on the science of crude drugs.