Table Speech

Air Conditioning Provides Greater Comfort in People’s Lives

August 22, 2018

Mr. Takeshi Kagami

 This summer has been exceptionally hot. As such, the Japan Meteorological Agency declared this extreme heat a “natural disaster”. Today, I will talk about the air conditioning technology that helps us beat the heat. Looking back on its history, the 1991 American biographical film “Bugsy” tells how epoch-making this technology was in the mid-1940s. This Golden Globe winning movie recounts the life of Benjamin Siegel who constructed a hotel and casino with an air conditioning in the Nevada Desert. Back then, such facilities were rare luxury and attracted so many guests.

 Here in Japan, air conditioning was first introduced into spinning factories in 1907 using cooled water. The Industrial Bank of Japan was the first office building to install air conditioners in 1923. But we had to wait until the post-War construction boom in the 1950s when industrial air conditioners became more prevalent as they were installed in large-scale buildings including the Imperial Hotel where we are now. As Japan enjoyed high economic growth in the 1960s, electric fans spread rapidly among households and by the 1970s, air conditioning technologies became much advanced to be installed in high-rise buildings. Home air conditioners came to replace electric fans, with its penetration rate rising from 49% in 1970 to exceed 90% in 2000.

 Now air conditioning equipment has reached saturation point and our business is expanding into three new areas. Firstly, our technology is introduced into high-tech manufacturing industries including semiconductors, liquid crystal panels and lithium-ion batteries to control temperature, dust, humidity, air pressure and air flow distribution in clean rooms or ultra-dry rooms. Secondly, we strive to provide multiple technologies to ensure better air conditioning energy efficiency, enhance building performance and improve renewable energy efficiency. We have an important role to play in promoting the ZEB (Zero Energy Building) initiatives rolled out among advanced economies, including Japan that aims to achieve it by 2030. And thirdly, we see potential markets overseas where our advanced technologies can make people’s lives in both hot and humid places as well as cold environment comfortable and pleasant.

 Before I close my speech, let me share my personal vision for the future. I believe “individual air conditioned suits” will become popular to let us work comfortably in all weather conditions. I also foresee air-conditioned mega-domes to be constructed, covering the entire town to protect lives and properties from extreme weather events and ensure safe, secure and comfortable living.

 Air conditioning has evolved over the past century to “Create a Freshening World,” as outlined in our motto, and to enhance industrial development. I am convinced that it has an even greater role to play in the future.

Distribution of Pharmaceutical Products and its Challenges

August 22, 2018

Mr. Takaaki Matsutani
Director & Senior Advisor,

 Let me talk about the history of the distribution of pharmaceutical products (hereinafter, pharmaceuticals) and its challenges. Pharmaceuticals are shipped from pharmaceutical companies, approved by the Ministry of Health, Labour and Welfare based on the Pharmaceutical Affairs Law, and then pharmaceutical wholesalers sell 99% of them to medical institutions and dispensing pharmacies. Sales of pharmaceuticals totaled nearly 9 trillion yen last year, accounting for 21.2% of the overall national healthcare expenditures that amounted to 42.5 trillion yen.

 In 1961, Japan established a system of universal health insurance that boosted sales of pharmaceuticals. Sales competition intensified to the extent that the pharmaceutical industry came under public scrutiny and the administrative authority had to repeatedly issue recommendations for correction. In 1983, the then Ministry of Health and Welfare launched the “Conference for the Modernization of Commercial Transaction Practices of Ethical Drugs” together with pharmaceutical manufacturers and wholesalers, medical institutions as well as academic experts. Based on its report issued in June 1990, the Central Social Insurance Medical Council announced a new pharmaceutical price calculation formula (the weighted average price plus fixed allowances) in 1992, providing wholesalers greater discretion and ensuring their independent and sound management. Consequently, the pharmaceutical industry underwent drastic restructuring and consolidation. Separation of dispensing from medical practice accelerated at the same time, making health insurance pharmacies account for the majority (53%) of the sales share.

 Currently, there are 16,000 items listed in the Pharmaceutical Price Standard, mainly classified into three categories of patent drugs, long-listed products and generic drugs. Their sales proceeds and volume shares vary considerably, requiring strategic distribution center management as well as skilled negotiating tactics for upstream-downstream transactions. The government works to ensure sound management of the drug price system and issued the “Distribution Improvement Guidelines” in January 2018 focusing on wholesale distributors. As pharmaceuticals constitute an essential component of the public medical insurance scheme, the wholesalers play an instrumental role as a public infrastructure provider. Pharmaceuticals are supplied to 230,000 medical institutes and pharmacies across the country through extensive distribution networks that can be compared to capillaries that permeate living tissues and supply it with vital nutrients. Besides undertaking physical distribution, wholesalers collect and provide information, ensure traceability, retrieve defect products and take crisis management measures in cases of earthquakes, large-scale natural disasters, pandemics, terrorism and counterfeit drugs.

 As we are experiencing a significant change in our demographic structure, due to declining birthrate and the aging population, there is an urgent need to improve the efficiency and sustainability of the medical system. We are determined to play a responsible role through self-reform.