Early in the Showa period, almost half of transaction values in Doshomachi consisted of home remedies and new drugs. Kobayashi's wholesale sector specialized in home remedies and thus experienced little impact, but Japan's new drug market was changed dramatically in July 1914 when World War I broke out in Europe.

Japan also entered this war and fought Germany and other countries as a member of the Allied Forces. However, Japan was geographically distant from Europe and did not directly trade fire in many circumstances. However, its distance from Europe gave Japan the advantage of being able to export various goods, and the Japanese economy prospered.

However, at that time Japan imported most of its new drugs and the raw materials for them from Germany. When the war erupted, the industry suffered from a shortage of goods and prices skyrocketed. One pound of glycerin rose from 23 sen to 3 yen in a short period. Some people even crushed aspirin (acetyl salicylic acid) to restore it to salicylic acid. Before World War I, Japan depended on imports for almost all of its new drugs. The war, which interrupted these imports, spurred domestic production of new drugs and their raw materials, and contributed significantly to the pharmaceutical industry.

Kobayashi was not greatly impacted by World War I, but it suffered heavy damage-both human and physical-in World War II (the Pacific War).

The domestic economy gradually shifted into wartime regulation economy once the China-Japan war broke out in 1937. An increasing number of employees were drafted into the military and left for the battlefront, while others were forced into compulsory labor. Female workers became a conspicuous presence at the Jyusan factory. The shortage of raw materials became more severe, and small companies began to merge and absorb each other with the government's aid. Factories designated as munitions factories also increased.

Kichitaro did his best in these harsh circumstances. One of his efforts here was the Kobayashi Youth Promotion Club, formed at the suggestion of a company manager. This club, consisting of young employees, decided on uniforms and functioned as a group at every turn. The club bolstered morale, held marches on weekends and cooperated with current affairs while promoting Kobayashi. At this time, Kobayashi absorbed several small companies, and was able to operate until the war was over without having its factory designated as a munitions factory. As Japan neared defeat, the company suffered extreme shortages and the company was essentially unable to sustain operations. On March 14, 1945, Osaka suffered a major aerial attack launched by the American air force. The incendiary bombs hit the central area of Osaka and fires broke out all over the city. Doshomachi was no exception. The headquarters in Kyomachibori were engulfed in flames in a matter of moments, and although remaining employees fought desperately to halt the fire, the building burned to the ground. Fortunately, the Jyusan factor had escaped this fire, but would later be burned in subsequent aerial attacks.

Five months after the Kyomachibori headquarters was razed to the ground in this fire, Japan approved the Potsdam Declaration and the war ended. Most of Japan's major cities had been devastated and the majority of the capital infrastructure had turned to ashes. Kobayashi Daiyakubo and Kobayashi Pharmaceuticals were no exception. Not only had the company lost its headquarter and factory, but many of its talented employees were lost in the war and air raids. However, Kobayashi began reconstruction as quickly as possible at a time when most Japanese were in a daze.

The shock of the defeat in the war did not hold Kichitaro back. In the burnt-out Doshomachi, he searched for real estate up for sale and arranged for a site for new premises without even consulting with his executives. Not only did he secure a site for the new premises, but he moved energetically to find personnel and products.

These activities were very aggressive and large-scale efforts in the attempt to reconstruct the country after the war. As would be clear later, this was the start of the activities that would spearhead the company's expansion and reinforcement.