Kobayashi Pharmaceutical and indeed the entire pharmaceuticals wholesaling business experienced significant growth from the early 1950s, which was supported by a high growth period within the pharmaceuticals industry, referred to as a boom in mass-market preparations. As the Japanese population began to realize that consumption was not necessarily evil, and was indeed a virtue, they began to turn their attention to their own health, resulting in an appreciation for over-the-counter preparations such as vitamin products. Moreover a shift towards technical innovation, automation and improved productivity enabled Japanese pharmaceuticals manufacturers to engage in mass production and mass marketing.

The start of this boom in mass-market preparations was marked by a prevalence of over-the-counter preparations in favour of preparations sold through physicians. Kobayashi Pharmaceutical has traditionally enjoyed a strong position in the over-the-counter market, and as of around 1950 the company had a market share of roughly 20 percent of the total monetary amount of pharmaceuticals produced, giving it a strong presence in this resurgence in family medicine products.

Although at this time Kobayashi Pharmaceutical achieved a tremendous increase in its performance, this was also the time in which events would occur that would shake the distribution system for pharmaceuticals at its very foundations.

On April 1, 1961 the National Health Insurance Program was introduced. Prior to this date only some individuals were covered by health insurance, but the enforcement of the National Health Insurance Law required the covering of all Japanese citizens, so that every citizen came to be covered under some type of insurance. This system of national health insurance completely changed the distribution routes for pharmaceuticals from that time forward. People became much more willing to seek treatment from physicians, and the demand for prescription medications increased, while at the same time there was a rapid decline in over-the-counter preparations.

This reduction in the market for over-the-counter medications worked to the disadvantage of Kobayashi Pharmaceutical, as Kobayashi had almost the entire market for non-prescription medicines, while the company did not have a strong position in the market for prescription drugs.

It was 1966 before Kobayashi Pharmaceutical organized a sales division which specialized in marketing to physicians, in its Yokohama branch. Although this section did not achieve the sales initially expected, the company steadily built up its sales force through actions such as recruiting retirees from major hospitals, and by the early 1970s the company had more than 30 employees dedicated to this sector, in areas including Tokyo and Yokohama. While the prescription medicine sector only occupied a small percentage of the company's annual sales, it offered some prospects that were impossible to ignore.

Although in 1973 the company downsized its prescription sales section, in subsequent years the firm once again began to develop this area of business.

The early 1960s also experienced a price war in over-the-counter medications, and in 1963 pharmaceuticals manufacturers worked to increase products which they were allowed to set resale prices on the retail market, as well as products in which they would have control over the method of marketing at stores. For this reason marketing staff at Kobayashi Pharmaceutical exerted every effort to book sales in products for which they were able to set the retail prices.

The Thalidomide scandal occurred in 1962, which was followed by fatalities from side effects in cold medicines packaged in ampoules. These incidents brought an end to the boom in mass-marketed medications which had occurred in the latter half of the 1950s and the early 1960s.

In December 1961 Kobayashi Pharmaceutical launched its athletes foot/ringworm preparation Kyoryoku Kobayashi Tamushi Chinki, and in 1964 the company adopted a division headquarters organizational system. In this year the firm also worked to expand its network as it opened branches in Tsukaguchi and Fuchu.

On December 22, 1964, Kichitaro Kobayashi passed away at the age of 91, having lived a full life. Although he had continued to hold the right to represent the company even at this age, he had effectively retired before the end of World War II, handing over actual authority to Saburo and Teruko.