Hello, everyone. My name is Sakurada. Thank you very much for joining us today out of your busy schedule. The Sompo management thinks that the egaku is a symbolic product for the path that we are going to take. Today, we have this opportunity to talk about egaku in front of you. I am very touched. Mr. Endo is going to talk about specifics of egaku. Before Mr. Endo's presentation, I would like to explain why Sompo has entered the nursing care business, what kind of journey we have taken. I would like to explain about Sompo's medium to long-term strategic outlook as well. On the personal note, in 2010, I became the president of Sompo Japan. In March of the following year, the Great East Japan Earthquake occurred, and we have had exposure to the mass media reporting about the earthquake.
I went to the site, and it was a terrible situation, and we did whatever we could for early payment. As a result, we received lots of words of gratitude from our customers, and all the employees could feel that we made a difference to someone, and we could reaffirm the social mission of insurance and its importance, and we could feel proud of what we have been doing. Meanwhile, I started to wonder in front of the big disaster whether it is enough to just provide insurance to mitigate a negative event, or whether I want to do something else. If just the mission of insurance is good enough for us for another 10 years or 20 years of business. I wanted to feel closer to our customers and realize security, health, and wellbeing that everyone desires.
Because with an insurance policy for unexpected situations, I stay off my customers most of the time after they sign a contract. Rather, I wanted to stay on with our customers, being always needed by them and to be connected with them. Theme park of security, health, and wellbeing, this phrase, to be honest with you, is filled with these thoughts. Both outside and inside our entity, there was a big question mark about this idea. As to this theme park of security, health, and wellbeing, the purpose of Sompo is well-rooted, I believe, in more than 130 years of insurance business, and its importance will remain intact. We are working on the necessary transformations to realize Sompo's purpose as well. For the past more than six years, we have been making efforts.
We made a full-scale entry into the nursing care business in FY 2015 after a considerable amount of time of discussions, including outside directors. Of course, not everyone agreed to enter this business. The outside directors at the time were quite right to ask why Sompo, a major player in the non-life insurance industry, would go into the red ocean nursing care business. Not only outside directors, but also the directors inside had that question. Although there is no scientific evidence, it is said often that the incident rate is like 10% or once in a decade incident happens. The number 10 is often referred to in the discussions on insurance business. This means that 90% of the customers, if you like, do not get any benefits paid because it's not necessary. There has been no incident.
The insurance is to prepare yourselves for something unexpected. Nursing care, old people, senior people, you can have contact with users every day. For many people with social cares provide, the home those seniors will live to their deaths. Sompo wants to be engaged in business with which customers feel grateful to Sompo. That way, we can be a business which is a must for many people. Such a vision, a dream is on one side, but on the other, there's a reality of nursing care. The shortage of human resources in the nursing care industry is a national crisis. I attend some government meetings. Some meetings are chaired by the Prime Minister, including Mr. Abe, Mr. Suga, and the current Prime Minister, Kishida. They all say that nursing care is in a critical situation.
That means by solving that problem, Japan can present the nursing care model on a global basis. We have confirmed that the government people have such aspiration as well. By 2050, net zero target by 2050 has been declared with other developed countries. Even before that, in 2040, there could be a collapse of nursing care, and the probability is high of that happening unless we do something to avoid it. Before we engage in innovation, the nursing care will just collapse. In the U.S., many people, in particular, employees of large companies, leave their job to take care of their loved ones. That is a national crisis, for the U.S., for the U.K., and for Europe. Also, China could also face that crisis. Globally, something very close to national crisis is faced with the many countries.
Still, no countries have a solution to solve that problem. I feel strong sense of crisis about such situation. In any case, we entered this nursing care business in 2015. Fortunately, only in several months, we acquired two major nursing care businesses. As a result, we became number one in terms of number of rooms available. After the acquisitions, that we could capitalize on our capability to improve the occupancy. Now we have a leadership position in the nursing care industry, so we are ready for the next stage. I talked about national crisis. This is not a horror story. The biggest challenge in Japan's nursing care industry is demand supply gap of nursing staff, users, senior people, and the nursing care staff, welfare working staff. The number is less than 300,000 already. By 2040, the gap itself will be close to 700,000.
If we do not do anything, the gap will be around 1 million shortage of caregivers, namely the collapse of nursing care. From the time we entered the nursing care business, I believe that we could create a model that would satisfy both quality and productivity, owing partly to the other force, the [Industrial Revolution Center]. We are facing with this challenge, and we need to deal with it, and we need to satisfy both quality and productivities through digitalization. I believe that we can do that. Generally speaking, data collected on internet, AI data included, such are the virtual data. The data Sompo Group is talking about is real data. Real data is clear and trustworthy because the data source is clear. When that incident happened, and who was driving, and what is the level of injury, and what is the amount of loss.
When did the typhoon hit which part of the country, and how much damage or landslide. That's part of the data. We take care of more than 80,000 seniors in our care facilities and more than 25,000 other staff workers. In total, more than 100,000 people are the subject of the data collection, the subject of real data, day in, day out. Probably on a global basis. In terms of real data from insurance and nursing care, Sompo has the largest data in that area globally. We met with Palantir, a major data analytics company in the U.S. Palantir, Alex Karp, Peter Thiel, two CEOs, they talked with us, and we agreed on what we wanted to do, that is to solve people's problems. The technology should contribute to happiness of people. If not, technology is meaningless.
We are in agreement in that sort with those two CEOs of Palantir, and Palantir chose Sompo to form a joint venture on a 50/50 basis, which is rare in their standards. The CEO comes from Sompo. What happened after the encounter with Palantir? We have a tremendous amount of data, so it's like we have the reserve of crude oil. The question is how to refine the crude oil, the refining technology. Of course, Palantir is very much advanced in that space. Back then we thought that we could make a solution using Palantir's technology and our data. As a result of our efforts, we came up with this product, egaku. As a conservative basis in the current circumstances in 2030, at a conservative estimate, we would achieve JPY 10 billion of operating income.
In 2040, close to 700,000 caregivers' worst gap of supply-demand could happen in Japan, in which we can close the gap worth 220,000 nursing care workers. The ESG impact accounting basis, this can be translated into JPY 3.7 trillion social impact value. With confidence, we'd like to face with the current national challenge. In 2040, what will happen? Currently, JPY 11 trillion-JPY 12 trillion is the level of the cost of nursing care insurance benefits. In 2040, it will increase to over JPY 25 trillion, and many members of diet also share the source of crisis. We are engaged in concrete dialogue with them to realize Sompo's vision for the future of nursing care, and what kind of roles we should take, and what kind of deregulation should happen. We have been working on all of these things for a long time now.
Support for those initiatives is growing stronger, including support from the government, and we can continue to work together more. On a global basis, last year, the 8 billion human being was born last year. It took thousands of years for the world's population to reach 7 billion. Thousands of years. The leap to 8 billion took only 12 years. The population is growing so fast. While in Japan, population is declining, but globally, population is growing. Today, it is not population growth, but the unemployment, hunger, and resource depletion are becoming growing concerns. However, the population growth at the current pace is not number one concern. The number one concern or threat is population aging. The world is facing with the crisis in nursing care.
For example, in the U.S., the number of people aged 65 or older continues to grow, reaching 80 million by 2040, or about 1.5 times the number in 2020. Caregivers have been increasing at an average rate of more than 4% per year over the past five years. In most of the cases, it is your family members to take care of you. In the U.S., there are close to 44 million people who provide care for free. Of course, it is not enough. There will be fewer caregivers to support the increasing number of the elderly in the future. Those future social challenges are common to the world for the coming dozens of years. As a country that has experienced decades of aging, Japan is drawing a lot of attention as frontrunner of this issue. It is not as well known.
We aim to form a large ecosystem centered on egaku in collaboration with national and local governments, peripheral businesses, medical institutions, and so on. While effectively utilizing and expanding overseas partnerships, we are also taking on the challenge of exporting egaku overseas and providing services for family caregivers overseas. In fact, leading overseas operators have shown great interest in egaku. They have seen the prototype of our product, and we are in the process of deepening our specific discussions. We will continue to work vigorously to improve the quality of life around the world. We would like to present ourselves as an entity with the purpose to contribute to solving problems in the world, and that's why we are having this meeting to send that message to you. Thank you.
Mr. Sakurada, thank you. Endo-san, please.
I'm Endo, owner of the Nursing Care and Seniors business.
Thank you for taking time out of your busy schedule to attend our IR meeting today. I'd like to start by explaining the overall picture of our Nursing Care and Seniors business, our efforts to date, and the background behind the development of egaku. Our main operating company is Sompo Care, which is the second largest in the industry in terms of sales. Sales for the current fiscal year are expected to be JPY 150.4 billion. Although we do not know the most recent situation, the number one position in the industry is in sight. Sompo Care is characterized by its nationwide network of service bases in Japan, providing a full lineup of nursing care services from nursing care homes to home care services, including home visits and daycare.
In particular, Sompo Care has the number one position in the industry in terms of the number of rooms, including those at nursing homes, with approximately 28,500 rooms. Another characteristic of the nursing care market is that it is a very fragmented market, with the five major companies having a market share of about 3%. As Mr. Sakurada explained at the beginning of this presentation, Sompo entered the nursing care business in earnest with the acquisition of Watami no Kaigo and Message in FY 2015. In the previous mid-term business plan through 2020, we focused on building a foundation for growth as a nursing care operator by in-housing education, merging nursing care companies, and investing in growth.
Based on this foundation, the current medium-term management plan is steering the company toward growth, taking on the challenges of opening new facilities, M&As, improving productivity with quality, and fostering job satisfaction among employees to support growth. egaku, which I will explain today, is an initiative to expand the challenge of improving productivity with quality, not only to our own company, but also to the industry as a whole. Japan's nursing care services are unparalleled in the world in terms of network and scale. Over 60,000 businesses operate approximately 260,000 facilities and offices nationwide, and there are approximately 2.12 million nursing care workers. In addition, there are local consultation services for nursing care, such as community comprehensive support centers and in-home nursing care support offices or windows for consultation, which are supported by the Nursing Care Insurance System, creating a world-class network of nursing care.
As Mr. Sakurada mentioned, with aging population and a decline in the working age population, the long-term nursing care industry is facing a crisis of a shortage of human resources or a widening gap between the supply and demand of nursing care personnel. Two things are needed, we believe, to overcome this crisis. The first is to increase the job satisfaction and engagement of nursing care workers. The second is an overwhelming increase in productivity. These two. Through egaku, we hope to lead the industry in overcoming the crisis and making nursing care in Japan sustainable. There are three specific ways in which Sompo can contribute to addressing the social issues I mentioned earlier, namely the gap between the supply and demand of nursing care personnel. First, Sompo will transform itself and lead the industry. Second, through M&As, we will spread the wave of change in the industry.
Through egaku, we will provide Sompo's know-how to nursing care providers, aiming to become the de facto standard in the industry. Through these efforts, we hope to support more elderly people and transform the future of nursing care. This slide represents an image of our future growth. With our growth as a nursing care operator being the basis, we hope to achieve significant growth by shifting the paradigm of our business around egaku, thereby solving social issues and contributing to the profits of Sompo Group. In addition to existing markets such as the nursing care system market, egaku will also appeal to the untapped market of productivity and quality improvement through the use of data. We will approach this untapped market through the ND Software sales platform, which will be explained later, and through the Sompo Group's all-out network, including Sompo Japan.
We would like to deliver egaku in cooperation and collaboration with industry associations, surrounding industries, and a number of nursing care system vendors.
From here, I would like to talk about egaku product details and key success factors for the business expansion. egaku consists of three types of services, data utilization service, digitization support service, and professional service. These three types of services are provided depending upon the needs of the caregivers. In the data utilization service, we will provide an app we developed with Palantir to enhance productivity and quality. The digitization support service is where we expect to enjoy the best synergy with ND Software, and we will provide operating system to nursing homes. In the professional service, we will provide consulting and support service to solve problems felt by nursing home operators utilizing visualized data. It's really about showing the trajectory from before and after in three steps. Allow me to explain in detail about our data utilization service, starting with phase I.
We, at the moment, aim to provide seven types of products, by doing so, we're hoping to be able to provide this time creation value to nursing home operators. By doing so, we believe we'd be able to solve issues such as improving care service quality, operational efficiency, and enhancing engagement of caregivers. Next. What are the values created by egaku? One problem arising from the shortage of care workers is how it causes lack of room or leeway at the frontline care facilities. When only small number of care workers are available, they are too busy taking care of the current existing residents, making it difficult to accept new residents, and each care worker will be burdened more with things to do. That does increase people leaving the business, and that is exactly what is behind the crisis of caregiving service.
By creating more time through egaku, a system for accepting even the residents requiring more care can be possible, as well as enhancing employee satisfaction and engagement. A lot of caregivers, they want to spend more time with the users, with the residents, it's going to be important that we enable them to do so that they'd be able to feel the joy of being in the service. That's exactly what egaku can do. We believe the ripple effect of such benefits in this industry will help create sustainable nursing care services, as well as improving social status of care providers. egaku is expected to be deployed, as you can see on this slide, in facility-based and home-based sites, which altogether would be approximately 77,000 locations. There's 260,000 sites, first of all, we'd like to start with 77,000 in deploying egaku.
Within that, we will first of all focus on private nursing homes and specialized nursing homes. Especially at the beginning, the main users will be medium to large scale adopters who've already started digitization journey. We hope to refine services together with these early adopters. Also for other segments, we expect to develop and deploy our services based on the nature, the characteristics of each segment. Currently, like I mentioned earlier, by FY 2030, we're aiming to grow the business to up to JPY 30 billion and JPY 10 billion in operating income. From here, I would like to explain our efforts for the period from 2023 to 2024, which would be the early stage of the egaku business as we head towards the year 2030.
In this stage, we plan to refine our services and proceed with our development and verification testing together for further sales expansion in 2025 and beyond. I will explain each of these initiatives in the following slides. Sompo Care is also promoting the use of egaku. Here, we show some actual cases at care facilities that are housing 60 people and what is our estimated economic benefits. We estimate that by adopting egaku, a profit will increase by 15%, the operations will improve by 15%, with approximately JPY 8.4 million benefit on an annual basis. The price will be determined based on the situation of early adopters of egaku. We aim to, for example, as you can see here, again, this is going to be JPY 8.4 million annual benefit.
What we're trying to do is to aim to charge a portion of that as a usage fee, and thereby, we're aiming to reach JPY 30 billion in revenue by 2030. Although we haven't quantified the impact yet, we expect we can contribute to this new value creation by supporting senior residents' independence and by increasing employee engagement. What is necessary, especially at the beginning, is to refine our services in every way possible. We will look at our early adopters as our partners. We will aim to create impact at all levels, customers' perspective, as well as the management and front lines perspective. At the same time, we will seek to standardize and increase versatility of products to prepare for sales expansion in FY 2025. Several providers have already utilized egaku, and we have received positive feedback.
Such comments include how the centralization of medication information helps providers to better analyze the cause of change in the user's physical condition, or some comments would also say, "It's easier to gain the understanding of both the user and their family members because we can explain using the types of care based on data." We're confident that egaku will be a solution that contributes to resolving the issues that each of these companies would face. As we try to enhance egaku sales, I would also like to talk about utilizing Sompo Group network. This is just an example here, we are trying to utilize our network to form alliance with financial institutions nationwide. We already have signed business alliance with more than 30 financial institutions in regards to utilizing care providers' knowledge.
We will make use of this alliance to provide egaku to care providers, local care providers, who are customers of such financial institutions. We believe that if egaku can help stabilize care providers' business, that should also benefit that local financial institutions. Sompo will be leveraging our full group capability in promoting egaku. From here, I would like to talk about our collaboration, cooperation with ND Software. It joined Sompo Group from February 28th. I've been saying ND Software, N-de, not N-D. It's not about my pronunciation, it's N-de. Immediately afterwards, on February 22, about 20 executives from both ND Software and Sompo Care gathered for a day-long kickoff meeting to discuss the synergies that both companies can pursue. That was just a while ago.
For example, discussions focused on whether Sompo Care's expertise in the nursing care field could be utilized to provide added value beyond the framework of conventional business systems that we have. We will create our 100-day plan as soon as possible so that we'd be able to tie all actions in promoting egaku. ND Software is a system vendor that develops and sells Honobono series, a welfare operation support software, and it has the number one market share in the nursing care industry. The company's business performance is also growing steadily. Digitalization among nursing care providers hasn't really progressed. If you look at caregiving records or nursing care insurance billing systems, we know 64% of facility-based providers haven't digitized all these. In other words, all this main business is not being supported by digital means. It's still being done using papers.
The market situation leaves room for ND Software to expand its market share through its main product, the Long-Term Care Insurance recording and billing system. We thus aim to grow their product in tandem together with egaku. The core of egaku would be, again, the data realization service. It's a product that provides suggestions for improving productivity and quality by centrally managing and analyzing real data, which currently would be dispersed, fragmented, scattered throughout the nursing care facilities. If you want to have access to the real data in each business, you need to have access to the database managed by the system vendor. We believe that collaborating with ND Software, the number one system vendor in this space, we can enable smoother data entry and data integration. Even in terms of market access, we believe we can enjoy synergy with ND Software.
Of the markets targeted by egaku, approximately 35% of facility-based providers and 20% of home-based providers are clients owned by ND Software. In particular, ND has a very high market share of specialized nursing homes, which Sompo Care would not have. Therefore, we believe that by collaborating with ND Software, we can become the de facto standard in the industry in a relatively short period of time. We also expect synergies on the ND Software side by offering package sales with egaku to companies that have not yet adopted digitization. We believe that this will create, in the end, mutual benefits. Joint research with this AIST, National Institute of Advanced Industrial Science and Technology, signed a comprehensive agreement with Sompo Holdings in June 2021. It's also being utilized in egaku.
In April 2022, the RDP or Real Data Platform Collaborative Research Lab was established to conduct research on four themes. Depending on the theme, we also plan to establish expert committees, and we will aim to create solutions backed by evidence. Now, I have so far talked about egaku focusing on what we'd be able to provide to facility-based businesses. Before I close, I would like to now turn to discussing our even possible future potential by expanding egaku into home-based care. Approximately 75% of Long-Term Care service recipients are provided care at home. Or by a small-scale type of facilities that would only be able to provide limited type of services. Therefore, to close the gap between supply and demand of nursing care personnel, it's essential to improve productivity with quality in home care as well.
Home-based egaku aims to contribute to the utilization of data from the so-called trinity, in other words, of government, medical care, and nursing care, and to play a key role in creating comprehensive community care system that supports elderly in the community. In principle, one care provider provides all services. One care provider provides all services when providing care at a facility. The major difference at home-based care is that multiple providers provide services when providing care at home. Day service would be provided by A, or visiting care would be provided by B. This leads to less efficiency with lack of coordination and knowledge sharing among these providers. Some providers not being able to really understand the status of their users. In addition, each care service are provided under limited hours. It's not provided 24 hours a day.
That means family support or the support from their relatives becomes a must, which is another major characteristic different from providing care at facility. Home-based egaku aims to gain a deep understanding of users' conditions by integrating and centralizing data scattered across offices and utilizing communication tools from the user's perspective. By integrating and visualizing users' information, which has been fragmented until now, we hope to create solution to solve issues surrounding the home-based care. That concludes my explanation, but before I close, I would like to reiterate another thing one last time. Sompo will challenge and address the issues arising from declining birth rate and aging population, which indeed is a national crisis by, number one, developing egaku to become the de facto standard in the industry to help healthy growth of the nursing care industry.
Number two, further on, we'd like to use egaku as the core, the axis for exporting the Japanese nursing care ecosystem to other countries. With that, thank you very much. With that, we'd like to entertain your questions.
My name is Watanabe of Daiwa Securities. Thank you very much for the presentation. I have two questions. My first question is about synergy with ND Software. On page 27, you say that there are many customers of ND Software. My question is to how many of them you think that you can present egaku? On page 34, you have the assumption for 2030 The 1,300 facilities. If you can cross-sell to all of them and their softwares, then the target will be easily achieved, and probably operating income target of JPY 10 billion can be achieved earlier than the schedule.
My second question is deregulation. At the beginning, Mr. Sakurada, the Group CEO, said that the development meetings have been discussing it as well. What are the specific agenda of those meetings? When you entered the nursing care business, I think that you can expect some synergy with your insurance business. Any new developments on that point?
As to synergy with ND Software, Kume-san is going to explain about it. Here is Kume.
For your first question, synergy with ND Software. As we said earlier, on February 28, the ND Software joined the Sompo Group, and in this 100-day plan, we are revisiting their business plan through May. The synergy coming from cross-sell is assumed at a more than JPY 1 billion level. Fine-tuning is necessary, and we will enjoy a bigger synergy than just JPY 1 billion. As to the cost synergy, we have not touched it yet. In the process of the evaluation, we are going to come up with much brushed up the plan, including cross-sell effect and the cost synergy.
As to among 28,000 facilities, how much percentage? You mean 52,000. As to 52,000 facilities, they have a billing system, many of them. Actually, as to the number of the facilities using the ND Software services are 52,000. The market share is like 20%. For them, of course, we are going to target at them, proposing egaku. Other than that, there are untapped markets for record system. The billing system is a must, but 60%-70% of the other providers do not have record systems yet. We can provide ND Software system to them, and we can include egaku in the other package, the service to them. The other ND Software record systems and the egaku. The market is going to be quite huge. As to your second question, here is Sakurada.
From the government point of view, the nursing care issues are twofold. First of all, increasing gap between demand and supply. In other words, to take care of your parents or your spouse, you quit your job. It is happening. The government talks about growth strategy or new capitalism. Japanese Prime Minister talks about these things. No matter how much investment you make, it is always people who act on those plans. The labor population is shrinking in this country. The other demand-supply gap, that is going to contribute to the declining labor population of this country. We might not be able to achieve the target GDP, or in worst scenario, Japan as a country might collapse. The question is, what should we do to fill in demand-supply gap? Of course, we need to put together many people.
How can I say? The number of seniors, if they stay healthy for longer time, then the other gap can be filled in. Also by increasing the number of welfare workers, that would help as well. The nursing care insurance in Japan is a public program based on taxpayers' money and the premiums. To attract more people to work in this nursing care industry, the compensation should be at a certain level. The compensation should represent the value of their work in the nursing care industry. Such principle of economy is a bit difficult to play out, because if you want to raise the pay itself, then that would certainly lead to increase in premium or in tax. The government has used JPY 100 trillion to deal with the COVID-19.
The Social Security is the area where government has been using a lot of money. It will be very difficult for the government to raise tax to raise the pay for the workers. It is a dead end. There is no clear solution or answer there. The big question is, what can we do? Here is what Sompo is targeting at. We cannot increase the profit that are coming from the resources of taxes or the other premiums, but the other services, for example, are provided at home. It is what they call mixed care between public and private. We can capitalize the money in the private sector to provide services. That is one area where we can penetrate. Actually, we are going to make a platform for such concept to provide services beyond egaku.
Another point is improvement of productivity. According to the government's guideline, one caregiver cares up to three seniors. There are 60,000 care providers. It's a very fragmented market, including very small operators as well. To take care of three seniors by one person is a bit difficult to achieve. It could be less than two. In other words, productivity is very low. If we can consolidate all of these 60,000 providers, that would be a solution, but we cannot buy each one of them, one after another. The government cannot dictate the private entities to do that. Instead, we can create a platform on which those 60,000 operators continue their business. In terms of know-how, that they can enjoy the high level of know-how held by Sompo Care, the productivity will be improved.
This three versus one rule could be changed to four versus one or five versus one, without aggravating the quality itself. The workload of caregivers should not be heavier. When that happens, the demand and supply gap will further widen. As Mr. Endo said repeatedly, we have a very clear purpose in the nursing care industry. Workers there want to make seniors' life longer and happier. If their caregivers can work more for that purpose, the productivity and the quality, both of them will be improved. We need to improve both productivity and quality. That's the answer to your question. For the support provided by the government, it's not just about nursing care or the other medical care. Those who can afford should pay more, and that should be the guideline from the government.
As to improve the productivity, this three versus one rule should not be applied everywhere. As to providers that are meeting certain criteria, it could be four versus one or five versus one, and that is the part of the regulation that the government should take. As to how to evaluate quality, this is something that we are working with the government. I have this very strong expectation toward AIST. It doesn't need to be S&P or Moody's, but in the nursing care industry, we need to have a framework to evaluate the quality of care. I know it will be difficult to do that, because once such evaluation comes out, if you are negatively evaluated in that framework, the operator might go bankrupt. It might produce the larger demand and supply gap as well.
The nursing care support grade goes up, nursing care benefit goes up as well. Do we have the other mechanism, though, in this other framework as well? The structural reform and the principle of competition and evaluation of quality, these are some of the examples, many examples that the government has to work on. Those are the challenges. Through those challenges, we need to transform the Japanese nursing care industry. There is good opportunity or chance to win. My understanding is that the government has a great deal of expectation to Sompo Care. Thank you.
Thank you very much. We'd like to now move on to entertaining next question. We know there was a person who has been raising the hand for quite an early time via webinar, that's Shigemura San from Nomura Securities. Can you unmute yourself?
This is Shigemura from Nomura Securities. I hope you can hear me.
We absolutely can.
Thank you. I do have several questions. I'd like to ask three questions. My first question is about how you were able to select your partner, what is the reason why you chose ND Software? When it comes to nursing care software, we know that other people like WiseMan, Kaname, Kaibokei, would also have their market share. Why did you select ND Software?
Was it because you assessed their software, or was it because some of the customer base? Why did you choose ND Software? That's my first question. My second question is about bottleneck in adopting egaku. Especially when you talked about the usage fee would be like JPY 100,000. I think that was something that you said somewhere in your slide. When it comes to nursing care providers, I suppose JPY 100,000 probably would be a more burden compared to what other software would be charging. There must be a benefit that they'd be able to enjoy more than that cost. For example, some more efficiency in labor. What would be, again, the bottleneck in trying to adopt egaku? That's my second question.
My third question is about, looking at what egaku can do, it's not just an operational system, but it also enables improvement in operation. Quite an ideal system. At the same time, how do you mean to utilize the data you've been able to accumulate? On slide 32, you talk about device, and you also talk about AI matching and about some of the solutions that need to be overcome. For example, is it about system trying to improve ADL, or would you have other apps that you'd be looking into? Or is it about trying to expand what more you want to do? For example, finding even new partners. Those are my three questions. There's also one more thing that I do want to have your insights.
In FY 2024, there's going to be the next revision of long-term care insurance system. Do you think there's going to be additional charge for ADL or nursing care robots? Can you share with us what is your expectation? What do you think the outcome of the discussions would be?
Thank you very much for your question. First of all, the reason why we decided to select ND Software, it is true WiseMan would have quite a good market share. With that said, when it comes to nursing care record-taking and billing software, it is something that we did mention earlier, but historically speaking, ND Software would have strength here. Also the characteristics of the business. Comparing ND Software with WiseMan, we found that ND Software would be a better preferential option, especially as we try to expand our egaku.
That was one of the business decisions that we made. Also, as you know, ND Software was already in the hands of investment fund. That enabled us to encounter ND Software a year ago. Those are all the reasons why we decided to choose ND Software. When it comes to a system vendor, when it comes to everyone in this nursing care industry, the software, there's a lot of competitiveness. One of the things that we do have to work on is how we be able to enhance the development capability as well as the product capability of ND Software. This is really going to be one of the issues that we would have to think about.
As a matter of fact, from this month, this is something that we started to discuss with the management along with the business plan. Also, in terms of bottlenecks in adopting egaku, how do we want to utilize data? I'm sure Iwamoto-san will be able to give some follow-up comments. The largest bottleneck behind egaku, when we look around people in this nursing care business, I mentioned earlier there's like 60,000, there's a lot of small scale people. Then if you try to count some of the mid to large scale people, you don't really find many. These are the people who's working within this nursing care insurance. It is going to be important that we let them know that it is going to be important that they enhance the quality of care by making investments into software.
How would we be able to tap into that need is going to be absolutely important. Nowadays, we talk about the usage of Life Portal, it includes about ADL improvement. If you find the outcome of rehabilitation turning well, why not charge more? That's also part of the discussion that's been already around for the past two years. That is a fact. This usage of Life Portal, I'm sure the business operators don't really have much motivation to start talking about charging more for this. At the same time, the Ministry of Health, Labour and Welfare is really focusing on this. From that perspective, how could egaku be adopted would become something absolutely necessary. I mentioned earlier, de facto standard, but how to position egaku in that sense?
It's not exactly a bottleneck, but it is going to be an issue that we need to tackle. When it comes to how we'd be able to utilize data, Iwamoto-san, can you go for that?
Yes, this is Iwamoto. Allow me to follow up a bit about data utilization. On the type of the data utilization that we basically are looking at is, it's really about thinking how we'd be able to utilize the data amongst the private nursing homes and specialized nursing homes. In other words, how we'd be able to provide such application. We have all this data coming round the clock, 24/365. What's important is how we be able to have those data be utilized in home-based care.
Especially because when you look into the future, it's going to be absolutely important that you be able to sustain your life at your home as long as you can. That's going to be very important. In order to materialize that, data could be utilized. That's one specific area that we want to focus on. Of course, there should be other ideas as well, but this is exactly what we're focusing on at the moment.
Thank you very much. Can you also give me your insights about how you look at the FY 2024 revision of long-term nursing care insurance?
Yes. As for the revisions for FY 2024, I know the discussions have just got started. One discussion, for example. Within home-based care, let's say you're looking at a person who would be at care level 1 or 2, and how much insurance coverage would that be for these people? It seems like that part of the discussion is just going to be postponed. Again, the discussion about how much the national insurance could cover people with less need for care, that discussion is continuing. We will be focusing on how the discussion develops. At the same time, maybe this is not something subject to FY 2024, but again, how do you address, how do you assess the outcome? That's also part of the discussion around. That's also another topic that I do believe we need to pay attention to how things develop.
There are other discussions as well, those are the two areas that I really do believe it's important that we keep on following.
Thank you very much. If there's going to be more charge depending on ADL outcome, I'm sure, just like you mentioned, it's probably going to be a great system for you with more opportunities. I hope you'll be able to follow up on me more, but thank you very much for your detailed response.
Shigemura-san, thank you very much. Maybe we might want to now ask for people in the venue to ask a question.
Thank you for the presentations. My name is Kazuki. I am with the Covering Healthcare Industry at MUFG Securities. I'm sorry if I do not have much knowledge, but I'd like to ask about the section where you talked about early adapters. You talked about 100 examples of success as early adapters. egaku has been very well accepted and evaluated by outside players. I'd like to know exactly what is most appreciated by those providers. Is it the revenue increase or efficiency improvement? You talk about JPY 8.4 million per year economic impact, and that means, I think, that JPY 1.5 million or JPY 2 million per year, the payment coming from those providers to you. They operate existing the business, and in addition, they have to pay that much for this new system.
That means cost increase, and probably operators might have to run in the red. My question is, how much appetite do they have to replace old systems with new systems? The revision coming up in 2024, would it help them, or should we look into 2027? Could you please elaborate on that point from the user's point of view?
Thank you for your question. What is most appreciated by those users, early adapters? As we showed earlier, to whom how much service is provided, such data is not really understood well by the operator. Operator is always busy, and there's always shortage of the personnel, but they don't know exactly how much service is provided to whom. When it comes to early adapters, well, relatively speaking, those early adapters collect data better than others, so it was easier for them to adapt this new system. They want to know the current status. The visualization of the current care status is, first of all, appreciated by them. As you mentioned, there's some time lag to come to the outcome, expected outcome. Of course, when you look at ultimate outcome, it might take a lot of time.
By understanding the current status, you can immediately work on improvements of many things on that day of evaluation. That is another thing that is highly evaluated and appreciated. You said that the providers might have to start with the red number
The price of egaku is yet to be decided, and we need to think about how to sell the product for the coming two years. We'd like to go through product and market fit validation. Our final goals, targets remain unchanged. We would like to make it sure that the threshold, the entry point, will not be too high.
Thank you. That's clear. I have another simple question. I don't know if question is meaningful. You talked about revenue, JPY 30 billion, OP profit, JPY 10 billion, the targets. What is the rationale behind those numbers? On the general understanding that the margin will be around 30%, or is it a result of actual cost calculation that you come up with 33% of margin?
Let me answer your question. Of course, we referred to the margin as a general trend. In writing business plan, we look at the cost and cost estimates and unit prices. As to the home-based care and the facility-based care, we applied different unit prices. As a result, we came up with JPY 30 billion and JPY 10 billion numbers. As I mentioned earlier, the selling price is yet to be decided, so those numbers have range around it, and they need fine-tuning. Numbers in eight years' time, it might be a bit inflated. Those numbers are feasible and are based on reality. We have used both inductive thinking process and a general trend observation. As a result, we came up with those numbers. Thank you.
Next, I think it's Muraki-san.
Yes, this is Muraki from SMBC Nikko Securities. I have two questions. It's about your slide 17. It is a bit related to the earlier question. You have two years to prepare, and you're expecting that on FY 2025, there's going to be multiple launches. I think that's what you're saying in your plan. Now, Sompo Care, I know you have been going through pilot activities. How do you mean to use this next coming two years? You also talked about early adopters, but do you have some idea of how many companies you're talking about, or do you have the idea of scale? You're also saying that from FY 2025, you are going to be generating some tangible size of revenue, or is this something that we'd be able to expect?
I understand that the investment has been amounting to some of the payments that you acquired for Palantir. The holding side has been paying a lot. You do have to show that you'd be able to turn profitable in your next midterm plan. I want to hear your thoughts around here. That's my first question. My second question, ever since you've entered the nursing care sector, you have always been quite vocal about how to enhance the compensation of people working in this space. You have actually been working on increasing the wage. What do you expect to do in this upcoming April?
When it comes to this wage increase, it's not going to have that much impact for the total group, but it does still oppress the ability to generate profit, and especially the competitiveness of Sompo Care in capturing the right talent and the needs of RDP service. When you think about this, how do you think the wage hike could impact, or do you think that there is going to be an impact? That's my second question. First of all, allow me to first of all address your second question about enhancing the compensation. Sompo Care, as a matter of fact, has been working on enhancing the compensation or the payment for twice 2019 as well as this fiscal year. Back in FY 2019, that was like 12 months after acquiring the two entities.
Back then, the level of compensation to the care providers or care manager, even the nurse, was quite low even compared to the industry standard. That's the first place that we wanted to address and fix. That's one thing that we did back in FY 2019. In FY 2022, there was again this very large investment put in here. Of course, you may know that Kishida administration is really being vocal on paying more to the care providers as well as nursery school teachers. Even before Prime Minister Kishida would say that, we have been focusing on here. Within the nursing care, there would be the people who's doing a very pivotal role. We call these people care conductors. We wanted to make sure that these people would be paid the same level of pay as nurse.
These care conductors will be in home-based or facility-based care, and that's something that we did this fiscal year. Altogether with that, we also looked into the compensation for other people, be it nurse or care managers. Other people other than the nursing care providers, we also wanted to address their payment. That's where we decided to make a large investment during FY 2022. That means in FY 2023, we might be addressing the payment to the people who we had not been able to do back in FY 2022. Is that the end of the story? Of course, within the plan, we want to make sure we'd be able to adopt more egaku. It's not just egaku. We also want to focus on other technology, because there's about 260 facilities with care service.
Within this fiscal or next fiscal year, we want to make sure we'd be able to apply egaku to all these facilities so that we'd be able to foster enhanced productivity. We should be able to enjoy a good benefit in terms of cost reduction, in terms of the cost for the facilities as well as the labor cost. That amount of reduced cost could be used for offering more compensation and payment. This is something that we want to make sure we'd be able to periodically review so that we'd be able to revisit this in the entire five years. That's it for the compensation. When it comes to early adopters, can Iwamoto-san talk about this?
Yes. Within the two years, what can we do? I think this was also addressed in the earlier question.
Again, we do have confidence in the product capability itself. When it comes to how we'd be able to deploy this, how we'd be able to deliver this, frankly speaking, it has been taking time. In other words, we want to use this upcoming two years to make sure we'd be able to become better in terms of deployment or deliver. We want to be smarter, be able to deliver in a shorter time span. I think that's one crucial thing that we want to do. I think this is going to be the most important thing that we want to work on in the next two years. In terms of the numbers of early adopters, we are eyeing around 30 entities. Thank you very much.
With that, it seems like our time has come. No further people with a question in the webinar side. Would there be anyone at the venue? Anyone with some last questions? If not, I think we can call it an end. It is 5:00 P.M., now we'd like to end egaku strategy review session. If you have any further questions, please contact the IR department. Once again, thank you very much for your participation. Thank you.