Investor update

Jun 12, 2026

Summary

Strong market positions in Asia are supported by advanced technology and a unique localization strategy. The focus is shifting to high-margin oral healthcare, with targeted investments in premium segments and new markets. Recent acquisitions and organizational changes aim to accelerate profitable growth.

I am Ichitani. From my side, I would like to explain specifically about our overseas business. Today's presentation consists of the 4 points. First, I will provide an overview of our overseas operations, including our current business status and our approach to transforming our business portfolio. Next, I will present the details of our oral healthcare strategy, which is the focus of today's presentation. In the third part, I will discuss our initiatives in creating new opportunities in challenge for growth businesses. Finally, I will explain the organizational structure and talent for executing these strategies. First, here is an overview of our overseas business. The breakdown by country and product category is shown on the left. On the right, we have outlined the market positions of our main products. As you can see, Thailand, Malaysia, China, and South Korea in our 4 key markets, particularly, as you can see, we have been able to secure strong market positions. This demonstrates the widespread penetration of our products among consumers across Asia. Since entering the Thai market in the 1960s, our overseas business has expanded from Southeast Asia to Northeast Asia, and sales have grown by 5 times in the past 20 years. We believe that this long-term growth has been supported by 2 key factors. Our advanced technological capability and the strong local distribution networks. This is our partnership strategy and localization of management, in which we entrust operations to leaders who have a deep understanding of the local environment, including management. The greatest asset we have cultivated throughout this journey is our unique localization strategy. While global corporations pursue comprehensive product lineups and standardized economies of scale, and local corporations cater to region-specific needs, we believe our strength lies in having established a unique position that combines the strength of both while distinguishing ourselves from them. We combine the solid technical capabilities we have cultivated over many years in Japan with localization that thoroughly incorporates local cultures and preferences. The approach to offer products that caters to market structures and precise consumer sentiment will become more important than ever to realize proposals with high value add that serve to earn the support of Asian consumers. I would like to introduce 2 case studies that demonstrate the competitive advantages achieved through this localization strategy. The first is on the left-hand side, is the Systema Charcoal Toothbrush in China. By focusing on charcoal, which is highly popular in China, and combining it with Japan's cutting-edge technology, such as super tapered bristles and thin toothbrush heads, we developed this product. As a result, sales of the Systema toothbrush have more than doubled between 2018 and 2024 for that limited for this product. The second example is on the right-hand side. This is Nonio mouthwash in Hong Kong. While we previously imported and sold the Japanese product as is, we identified a strong local demand for prevention of receding gums and redesigned the product specifically for the local market. Since its launch, it has garnered overwhelming support and significantly expanded our market share, as shown on the lower right-hand side. In this way, the combination of local preferences and our technology has enabled us to differentiate ourselves from the competition. Building on these strengths, we must transition to a high margin portfolio in order to achieve sustainable growth, even amid a constantly changing external environment. This slide summarizes the roles and strategic directions of each business segment. Oral healthcare is, of course, a top priority on the left-hand side. By allocating management resources to the segment with the highest priority and in a concentrated manner, we will accelerate the growth of both sales and profits. Regarding beauty care and pharmaceuticals, which we classify as challenge for growth businesses, we will explore growth opportunities primarily in new markets where high market growth is anticipated, aiming to contribute to the growth overall profitability. Furthermore, on the right, regarding home care, which we hold a strong market position in laundry detergents, we will treat it as a stable earnings business. Thoroughly pursue product mix optimization and efficiency improvements to continue generating stable earnings and cash flow. Today, I will focus my presentation on top priority oral health care and a challenge for growth businesses, which center on new markets. I will now take a deeper look at how we are accelerating our strategy in oral health care, our highest priority area. In the Asian markets where we operate, two major and irreversible structural changes are underway. The first is, as shown to the left, rapid population aging across Asia. As shown in this graph on the left, Asian countries will age rapidly following the path that of Japan. As aging progresses, oral care needs will shift from simple disease prevention to maintaining quality of life and preventing periodontal disease. The second change is the expansion of the middle and high-income segments. Forecasts for household income distribution in Asia show that the number of middle and high-income households is expected to grow to around 420 million by 2025. As disposable income rises, consumers who are willing to invest more in their own health will become the majority. As a result, we expect the Asian market to shift further toward higher value-added products. In particular, the oral health care market in the 10 key countries where we operate has very strong potential, with sustained growth expected going forward. What will drive this market growth is higher unit prices. As shown in the market forecast data in the graphs, both the unit price per volume of toothpaste and the unit price per toothbrush in Asian countries are expected to rise steadily toward 2030, using 2023 as an index of 100. In short, this is not simply volume growth in terms of the number of units sold. Rather, the market as a whole is moving towards higher value-added products, driven by consumers' demand for higher quality and greater functionality. We believe this creates an opportunity for our high value-added strategy. Changes in distribution channels are also strongly supporting purchases of higher value-added products. These include the spread of e-commerce, social media, and the rise of lifestyle shops. The awareness to the beauty and the increasing demand for healthier looks and placing greater value on emotional appeal and design will rise. Changes in distribution channels are also strongly supporting purchases of higher value-added products. These include the spread of e-commerce, social media, and the rise of lifestyle shops. As a result, even in FMCG, we are seeing strong demand for premium products that offer solid evidence and high satisfaction, even at somewhat higher prices. We perceive this to become the new main battleground for growth in Asia's healthcare market. Based on these changes, we believe we can further grow the business and improve profitability by driving higher value-added products and targeting consumers with strong interest in health and beauty. To do this, we will build on our strengths in function-based products and services, as well as in our sales channels, while capturing changing consumer needs and offering new value. Today, I will explain each of these elements in order. As I mentioned earlier, the strength of our overseas business lies in our glocalization strategy. To further accelerate profitable growth in overseas oral health care, we believe we need to sharpen our focus on selected target segments based on this glocalization strategy. In the past, our investments were spread across multiple subcategories. As a result, we often competed head-on with players with greater financial resources, making us vulnerable to price competition. Going forward, we will clearly identify high value-added subcategories where our glocalization strength can be most effective and where high growth and margins can be expected. These include whitening, gum care, and sensitive care. We will concentrate our management resources in these areas. By avoiding a battle of attrition in basic commodity areas and by expanding share in value-added segments, we aim to achieve growth with high profitability. This slide summarizes the targets set for each country where we are strengthening oral healthcare, as well as the initiatives to achieve them. In each country, we are assessing the competitive landscape and our strengths by subcategory and refining our strategy accordingly. I will now explain the progress of some of these specific initiatives. This is an example of strengthening a brand based on local needs in the Thai market. In Thailand, we are updating our brand strategy. There are still areas and channels where distribution has yet to be expanded, and the unit price of toothpaste in the Thai market is also rising. We therefore believe there is ample room for growth by building solid marketing initiatives for each brand. Specifically, we are focusing on salt toothpaste, a basic value segment unique to Thailand. This segment accounts for around 17% of the overall toothpaste market. In this category, we offer Salz, a local brand with a solid market position. To further enhance its added value and expand its user base, we carried out a bold rebranding. With younger consumers as our clear target, we renewed the package design and promotional communication. We also launched a new product in collaboration with ChaTraMue, a long-established Thai tea brand. This has generated buzz, especially on social media. Even as domestic consumption remains soft, we are steadily evolving toward a higher value, more profitable business model. Amid an increasingly challenging consumer environment in China, we have shifted our strategy from quantitative expansion to a focus on profitability through the development of high value-added brands, and are seeing positive results. While striving to maintain prices in the highly competitive White & White volume zone price range, we are focusing on expanding the distribution of high value-added brands such as Systema and CLINICA. Our distribution channels in the fiscal 2025 have expanded to approximately 1.5 times their size from that of 2 years ago. As a concrete example of our approach to creating high added value, we would like to present a case study from the Chinese market, where consumption in China is becoming increasingly polarized. The high price segment we target, particularly the whitening segment, accounts for 22% of the overall market and is a highly attractive area that continues to grow rapidly. We are making full use of our Shanghai R&D center, LICS, to rapidly develop products that anticipate local trends. In April of this year, we launched a new CLINICA product that combines the 5 proprietary enzymes with whitening functions, which enjoyed tremendous support among younger consumers. As you can see on the lower right-hand side, this is a photo. Thanks to solid evidence and its excellent locally driven marketing, initial sales have been extremely strong, and we have achieved a significant increase in unit price compared to existing products. This is the kind of business that it is transforming. I would like to. Wang Fo-san has given us a video message, who is the managing director for Lion China. Hello, everyone. I am Wang Fo, managing director of Lion China. It is a great honor to have this opportunity to share with you Lion's competitive advantages and future prospects in China, and to extend my sincere gratitude to investors who have supported us over the years. Since entering China more than 30 years ago, Lion has consistently positioned oral healthcare as its core business. As for myself, I joined Lion 23 years ago, starting as a brand manager of Systema. Today, thanks to our advanced planning quality, the Systema toothbrush is highly favored by Chinese consumers, and we sell more than 50 million units annually in the Chinese market. It is precisely because we uphold the principle of quality first that Lion has become synonymous with high-quality oral healthcare products in China. This is the greatest competitive advantage that we have built. We have established an efficient and localized product development system that enables agile and forward-looking local innovation to meet the diverse oral health needs of Chinese consumers. We have also built a mature sales network that covers the vast majority of tier 3 and other cities in China, efficiently reaching consumers across the country through online, offline, and O2O channels. Including raw materials, manufacturing, and logistics, we possess a stable supply chain system that is flexible and cost competitive, enabling us to support the continued expansion of our business scale. Looking ahead, we have a firm confidence in Chinese market. In China, demand for premiumization and health-oriented products is growing steadily. We prioritize the high-value addition of oral healthcare based ourselves on the strong innovation capabilities of both the Japan and China operation, and rely on our highly trusted brand power and strong sales execution as our pillars to continuously strengthen brand momentum, thereby enhance profitability. With further urbanization and the use of e-commerce to penetrate lower-tier rural markets, we can continue to expand our consumer base. As a result, Lion will steadily increase its market share. Leveraging China's robust digital infrastructure, intelligent operations, and refined management will also become our competitive advantages, continuously contributing to improved operational efficiency and profitability. In the past, in China's fiercely competitive and rapidly changing market, we have continuously adapted and evolved with agility. We have not only achieved and sustained growth in performance and market share, but have also attracted talent and built an increasingly strong team. Today, more than any time before, I feel even more certain and confident about Lion's development in China. We are fully prepared for the future. As the head of the China region, I will lead my team in upholding a long-term perspective, taking high quality and high value as a benchmark, and China's consumers' needs as a guiding compass. We will steadily implement each of our strategies, continue to contribute to the enhancement of our corporate value, deliver tangible results to repay the trust and expectations of our investors. Thank you very much. While I have explained about our product initiatives, we do not intend to remain merely a company that sells high-quality products. To embody our purpose of redesigning habits across Asia and with an eye toward achieving medium to long-term growth, we are taking steps to expand our business scope. One such initiative is strengthening collaboration with dentists and related organizations. In 2025, we became the first Asian consumer healthcare company to participate as one of the seven companies, second only to the main sponsor, in the FDI World Dental Congress held in China. By building networks with global dental stakeholders, we are enhancing the credibility of our functional products while raising our profile as a leading company in Asia in oral healthcare habits. Furthermore, based on our partnerships with the dental channel, we are building a new business model that provides end-to-end support from consumers' awareness to behavioral change. By promoting regular visits to professionals and supporting self-care tailored to each individual based on guidance from dental professionals through our products and services, we aim to create a virtuous cycle of promoting visits, treatment, and maintenance to self-care, leading to the extension of consumers' healthy life expectancy and the sustainable growth of our business. This is an update of our specific progress. In China, we are building a system to create connections with dentists by actively participating in trade shows and hosting seminars while providing advanced technical information through an expert community. We believe this will generate a ripple effect, spreading word of mouth about the expertise and reliability of Lion products, both within and outside dental clinics, and we aim to further accelerate the shift towards high-value added services. In Vietnam, we are fully leveraging Merak Lion's robust network of medical and pharmacy channels to develop a new methodology called Early Preventive Treatment, which integrates the treatment solved by local dentists with our preventive care. We are promoting this approach at major events such as dental conferences and driving the robust launch of our oral healthcare business starting this May. In Thailand, we have also established a team specializing in dental channels and are poised to expand the model we have developed in Vietnam. Another critical initiative for expanding our consumer touchpoints and broaden our business scope in Asia is healthcare education. To date, we have conducted oral hygiene awareness campaigns across Asia. For example, in Malaysia, the Kodomo brand team conducted a 5-day toothbrushing program that attracted over 30,000 participants. Through initiatives focused on establishing healthcare habits, particularly oral healthcare, that engage schools and local communities, we have contributed to improving the quality of life for consumers across Asia and expanded our market presence. We are currently expanding these activities into Bangladesh, shown on the right-hand side, a market with significant growth potential. In Bangladesh, toothbrush usage rate currently stands at only one-sixth of the level of Thailand, and the market is expected to expand as awareness of oral healthcare increases. With our new plant set to begin operations in 2026, we are well prepared for market expansion. In addition to initiatives aimed at raising awareness of oral hygiene, we aim to expand the business by fostering loyalty and trust in the Lion brand. The content we have explained so far represents a functional value proposition, which leverages the strength we have cultivated over the years in areas such as the prevention of tooth decay and periodontal disease. As consumers' values and lifestyles continue to diversify, we believe that to achieve medium- to long-term growth, we must go beyond this and offer high value-added solutions that reflect the evolving needs of consumers. Going forward, we will strive to expand the oral healthcare offerings by integrating them with the emotion and beauty axis, which helps boost confidence in areas such as aesthetics and whitening. From the consumer's perspective, oral healthcare and cosmetics sections are located very close to one another, making this a field with extremely high affinity for beauty awareness. We believe that potential demand is particularly high in markets such as China, Singapore, and Thailand, where consumers are highly attuned to beauty trends. According to our research, approximately 40% of consumers in our target markets fall into this health and beauty-conscious segment, and we intend to take the lead in developing this new market for emotional and beauty-oriented oral healthcare, which our competitors have not yet clearly addressed. We will achieve solid margins and growth by offering high value-added products and services based on market needs. I will now move on to the third part, our challenge for growth businesses, which are designed to further enhance the profitability of our overseas business. Today, I will mainly share the progress of business expansion and synergy creation at 2 companies that were recently consolidated, one in Australia and one in Vietnam. First, I will discuss the development of our beauty care business in Australia. PNB, in which we acquired shares in January, operates mainly under the Sukin brand. PMI, after the share acquisition, is also progressing smoothly. Sukin is Australia's number 1 natural beauty skincare brand by sales, with exceptionally strong brand recognition. Its strengths lie in a product concept focused on being gentle on both the planet and the skin, as well as advanced product development capabilities that respond to global organic trends. Today, Sukin is sold not only in Australia, its home market, but also in 22 countries worldwide, including Europe, Asia, and North America. Green beauty expansion is the tailwind. Our growth scenario for Australia is to create strong synergies by combining Sukin's brand value with the Lion Group's global infrastructure and operational capabilities. On the sales side, we will strictly protect Sukin's core brand value and maintain a high-margin brand control model without relying on easy price promotions. As specific synergies, we will roll out successful marketing methods from stores and events in Asia to other countries. We will also introduce our advanced R&D evaluation technologies and use our SCM platform to improve efficiency and optimize inventory levels. Through these measures, we will further improve profitability and drive lean, profitable growth. Next, I will discuss our Vietnam business, which was consolidated last year. At MerapLion in Vietnam, we operate a unique and highly profitable business, mainly in pharmaceuticals, with a model that differs from our businesses in other countries. To help you better understand its potential and its contribution through synergies with the group, please watch this video message from Phan Thi Thanh Thuy, CEO of MerapLion. Dear investors and partners, I am pharmacist Phan Thi Thanh Thuy, currently the CEO of MerapLion. I have been with MerapLion for nearly 20 years, having held various roles including marketing management, business unit operations, and finally, overall company management. For over 26 years, MerapLion has continuously contributed to healthcare for the Vietnamese people with many market-leading brands such as Cisad, Oflac, Benica, and Medoral. July 2025 is a significant milestone as we officially became a member of Lion Corporation, Japan, made MerapLion's transformation from a traditional pharmaceutical company into a healthcare company with advanced values from Japan. With this, the vision of becoming the healthcare expert for Vietnamese families, we provide solutions and create good healthcare habits for the community, thereby building sustainable value for the company. Our strategy is built on 3 main pillars. First, MerapLion continues to optimize its competitive advantages from its unique business model, the EPE model, its integrated capabilities from production to trade, and its understanding of customer insights. We focus on developing pharmaceutical and the parapharmaceutical products with differentiating factors, bringing added value to customers, and ensuring sustainable profit margins for the company. Second, with MerapLion's strong systems and extensive industry connections, combined with Lion's technological and brand strengths, we are confident in launching new flagship product lines for Lion, such as oral care and beauty care. This strategy not only delivers long-term growth, but also plays a crucial role in realizing MerapLion's Japanese quality positioning. Thirdly, we focus on optimizing operations and improving efficiency by updating the team's capabilities, applying digitalization to operations, streamlining the structure, and enhancing supply chain efficiency. This is also a key pillar in ensuring good profit margins for the company. Looking ahead, we possess three key elements for sustainable growth. The pharmaceutical industry still has significant growth potential due to the aging population and the increasing awareness of healthcare among Vietnamese people. Our differentiation strategy and clear implementation plan is the second. Specifically, we are also conducting research on a significant investment plan to expand our pharmaceutical business. Thirdly, from the intrinsic value of MerapLion's culture and people, the organization's most valuable asset. We are confident that together, we will create greater value for the community and for the sustainable development of MerapLion. Finally, the positive feedback from customers and partners after only a short period of transformation, along with the anticipation of a truly Japanese-influenced MerapLion, is a great motivation for us to continue moving forward, steadfast in our stated strategy and committed to MerapLion's long-term growth. Thank you sincerely, and we look forward to your continued trust. As just explained, the strength of our Vietnamese business is its doctor-recommended model, built on strong trust with doctors and pharmacists. Based on this strong infrastructure, we will expand our core pharmaceutical business into new dosage forms that we have not fully addressed before, such as solid form antibiotics. In addition, by leveraging group synergies and developing other business areas, we will increase the probability of achieving highly profitable and sustainable growth. From this slide on, this will be the final part. I would like to explain about the organization and talent supporting growth, that will realize this, the strategy that I explained and to generate results. First, I would like to discuss the organizational changes we have implemented this year. As previously announced, we have restructured our overseas operations from the previous two headquarters based on area system, to a business unit system directly overseen by me, the CEO. Under the previous two-headquarter system, management functions were established separately for Northeast Asia and Southeast Asia, which slowed down decision-making. Additionally, since R&D functions were housed in a separate organization, there were challenges in coordination. Under the new single business unit structure, the COO bears overall responsibility for performance and investment decisions across all countries worldwide, and functions such as marketing and R&D are integrated directly into the country's specific business units. This enables each country to make immediate decisions on the ground, evolving our business operations into a swift, proactive system capable of taking the initiative in the rapidly changing overseas market environment. Furthermore, to rapidly implement our localization strategy, we are vigorously promoting the investment of group R&D capabilities. We have overhauled the development process, which were previously centered in Japan, and have positioned Japan with its wealth of usage assets in China, with its remarkable pace of innovation as hubs for technological innovation, focusing on the deepening of core technologies and the development of innovative evidence. Furthermore, we have specialized our development bases in countries such as Thailand and Malaysia in locally led high-speed product developing. By clarifying roles and promoting open innovation, we will accelerate the speed from product development to launch and continuously create differentiated products. Finally, I would like to discuss about human resources. No matter how excellent a strategies or organizational structure may be, we cannot achieve results without talented people on the ground to put them into action. Lion's greatest strength in its overseas operations lies in the localization of management that we have cultivated over the years. Currently, 75% of the heads and representatives of our group's overseas subsidiaries are local management personnel with a deep understanding of local culture and market characteristics, and leaders in key countries operate their businesses autonomously. At the same time, we engage in in-depth discussions regarding management policies and overall strategy between our headquarters in Japan and local subsidiaries to ensure a shared direction. Regarding actual execution, such as marketing initiatives, local management who deeply understand consumers and work closely with local employees, make swift and precise decisions. Furthermore, having established a management infrastructure that allows the head office to review various data in a timely manner, we believe it can improve the speed of execution while maintaining effective governance. We are convinced that this management style is the driving force behind the sustainable enhancement of corporate value in rapidly changing overseas markets. Lastly, based on the strategic overview provided earlier, here is an update on the progress of our company-wide capital allocation. In the second stage, we have made growth investments our top priority. This has led to the investments in our challenge for growth businesses, starting with the acquisition of Merak Lion in Vietnam last year and the acquisition of shares in PNB earlier this year. Going forward, our top priority is to capture growth opportunities in the oral healthcare business. By executing the strategy outlined today, we will expand our business and achieve further growth and higher profitability. Once again, this is a summary of today's presentation. Once again, Lion overseas business is shifting course from the previous stage of quantitative expansion to a stage of profitable growth based on market-driven and competitive advantage-driven strategy. We believe that when these elements, accurately capturing changes in the attitudes and structures of Asian consumers, advancing our strategy of selection and concentration in high value-added segments, our business unit structure that enables rapid execution and the PDCA cycle, and the 75% local management personnel who truly understand local conditions are organically integrated and the gears of the strategy mesh together, the likelihood of achieving profitable growth becomes extremely high. We view changes in the market environment as opportunities for evolution and promise to deliver results that meet the expectations of our investors. This concludes my presentation. Thank you for your attention.