Unwinding the bubble-era subsidiaries, and a president from outside the family (1996)

The decade a family-remedy house borrowed outside hands

The heart of this decision lies less in how many subsidiaries were wound up than in who was asked to wind them up. A company that had begun with Chujoto, a remedy handed down in the family, and had been run by three generations of that family, handed the clearing-up to a pair of executives out of Daiichi Pharmaceutical. Choosing a man related to the founding family preserved its face, but the standard applied to the actual decisions was the operating experience of a pharmaceutical company. What chairman Tsumura Jusha had preached in 1992 — the patient work of improving the constitution of the business and building basic strength — was in the end carried out by managers who came from outside the family.

Line up what was disposed of — cosmetics, imported fine art, the US arm — and it is a list of fields in which knowledge of crude drugs is worth almost nothing. What remained was the 129 formulations secured by the 1976 reimbursement listing, an asset no competitor could come along later and take. After the outward investment of the bubble years had consumed a decade of profits, Tsumura’s earnings returned to kampo alone, and through the resumption of dividends in 2004 to the 80% share of prescription kampo it holds today. What a company ought to protect is often clearest from the list of what it lost.