Merging Sanseido, Kuraya and Tokyo Pharmaceutical, and moving to Tokyo (2000)

A merger of subtraction, not addition

What distinguishes this merger is that, while presented as a union of equals, it began in practice from the premise that the result would be “none of the three companies.” The figures — 206 working-group sessions and 245 meetings — record not the speed of the integration but the refusal to spare it any trouble. As the drug-price spread narrowed from 19.6% to 9%, whatever profit remained to a wholesaler had shifted toward stripping out duplicated purchasing and logistics. That the three firms began with the closure of 24 sales offices and 4 distribution centres shows clearly that the object was not to add up their sales networks but to subtract cost.

Subtraction alone, however, did not bring the margin back. An operating profit of ¥1.9 billion on sales of ¥1,073.0 billion in the year to March 2001 reflects an industry in which size does not convert directly into bargaining power. When president Watanabe Shuichi said in 2004 that the company was “not merely a delivery service for medicines,” four years had passed since the merger. What the Kobe-founded wholesaler gained by moving its head office to Tokyo was the leading position — not the margin.