Overseas Business

Accelerating overseas business expansion through aggressive investments

Establishing a strong global brand

Having positioned international growth as one of its key drivers, the Kobayashi Pharmaceutical Group has been working diligently to increase sales in a total of six brands that include body warmers, cooling gel sheets for the forehead, OTC pharmaceuticals, deodorizing air fresheners, eye glasses cleaners, and oral hygiene products, primarily in the United States, China and Southeast Asia.

Establishing a strong global brand

Performance of Overseas Business

Net Sales

Net Sales

Ratio of Sales by Region for Overseas Business

Ratio of Sales by Region for Overseas Business

Fiscal year ended March 31, 2015

Ratio of Sales by Product Type for Overseas Business

Ratio of Sales by Product Type for Overseas Business

Fiscal year ended March 31, 2015

Expansion by Region (Primary Markets only)

United States

Sales Strategies
• Expand sales of body warmers and augment production capacity
• Utilize new sales channels captured augment production capacity through M&A to expand sales

In the United States body warmers are primarily used to treat lower back pain or other ailments and to keep warm during sporting events or outdoor activities.

The Kobayashi Pharmaceutical Group entered the United States body warmer market with its products mainly used to treat pain or other ailments, but we recognized the key to increasing sales was to expand into the segment of the market where body warmers are used to keep warm during outdoor activities. As a result, we decided to acquire HeatMax, Inc. in 2006 and Grabber, Inc. in 2012 because of HeatMax's discount store, supermarket and drugstore sales channels and Grabber's sporting equipment specialty stores and ski shop sales channels. Both companies retain solid body warmer brands and after they joined the Kobayashi Pharmaceutical Group our market share in the United States body warmer market has now reached upwards of 50%.

Product placement next to POP

▲Product placement next to POP

Maximizing Sales Channels

Maximizing Sales Channels

Going forward, our goal will be to encourage United States consumers to use of body warmers as a way to keep warm on cold days in order to further grow the market.
As a first step, we are placing body warmer products next the point of purchase (POP) to make our products more visible and recognizable.

We will also take full advantage of both HeaMax and Grabber's sales channels to sell our other products as well, such as eye glasses cleaners and Itch Relief Patches, an itch relief medication developed in the United States.

To further support our cause, we are taking steps to expand our production system in the United States, which includes the construction of a new HeatMax factory in August 2012.

Our Brands in the United States

Body warmers

Cura-Heat (for pain relief)
Hothands and Grabber
(to keep warm during outdoor activities)
Our lineup of body warmer products for pain relief and to keep warm when outdoors will be sold through discount stores, sporting equipment specialty stores and other sales channels.

Cura-Heat (for pain relief) Hothands and Grabber

Cooling gel sheets

Be KOOOL
We will market our cooling gel sheet for the forehead to soothe fevers, which represents an all-new and unique solution for United States consumers.

Be KOOOL

China

Sales Strategies
• Launch economically priced body warmers and expand sales in the inland region
• Augment production capacity by adding new factories

We launched sales of body warmers in the China market under the product name Nuan Bao Bao in 2003. Since then, these products have recorded double digit growth and have become one of our core products in the market. To further raise the visibility of this product, we have hired famous entertainers to appear in television commercials, used Baochu (standalone product displays) for in-store advertising, and held in-store sales promotion campaigns as well.

The key to further growth will be expanding our footprint into the inland region of the country where our brand visibility remains low. In recent years China's inland region has begun to develop its distribution infrastructure and has seen improvements in the standard of living, both spurred on by economic growth. As a result, we are working to expand the number of stores that carry our products in the region and began selling a body warmer priced more economically than our existing body warmer products geared toward this region in September 2012.

Sales promotion campaign

▲Sales promotion campaign

Conceptual image of our new factory in Anhui Province

▲Conceptual image of our new factory in Anhui Province

Moreover, we are turning our attention to the sale of cooling gel sheet for the forehead Bin Bao Tie as well. Chinese parents tend to pay much closer attention to the health of their newborn child even more so than other countries because of the one-child even more so than other countries because of the one-child policy, which has translated into growing sales of our cooling gel sheet for the forehead geared toward infants. Given this trend, we began airing a television commercial starring infants in July 2013 with the goal of further enhancing our visibility going forward.

We are constructing a new factory in Anhui Province, following similar factory built in Shanghai, with completion slated for summer 2014. This new facility will augment our production capacity to cope with rising demand, which in turn will enable us to boost sales of our body warmers and cooling gel sheet for the forehead.

Our Brands in China

Body warmers

Nuan Bao Bao
Uses an original packaging design unique to the China market that features an illustration of a women

Nuan Bao Bao

Cooling gel sheets

Bin Bao Tie
Offered in adult, children and infant versions

Bin Bao Tie

Deodorizing air fresheners

Sawaday
Includes a new jasmine scent not found in Japan to better suit the preferences of Chinese consumers

Sawaday

Oral hygiene products

Taifuchin
Sold mainly in drugstores as a denture cleanser

Taifuchin

Southeast Asia/Other Regions

Sales Strategies
• Expand sales of core products Ammeltz and Netsusama Sheet
• Make further progress in localization

The Kobayashi Pharmaceutical Group's overseas business began with the export of Ammeltz, an external anti-inflammatory, to Southeast Asia some four decades ago. This product is known by consumers in Hong Kong, Malaysia and Singapore as Anmeiru and has established a solid presence in the market.

Our cooling gel sheet for the forehead has helped to create an all-new way of treating fevers in the region, which has contributed to the success of its sales. We also recognized that these products can also be marketed as a heat relief remedy since the climate in Southeast Asia is somewhat similar to Japan's hot and humid summers. As a result, we are airing television commercials in Hong Kong and Malaysia, where the market has been established, to promote these products as heat relief remedy and to further expand the applications for our products. In Indonesia, where income level is relatively lower, we are selling our cooling gel sheet for the forehead in single sheets, instead of in the typical 6-sheet package.

We recognized that growth in emerging Southeast Asian countries represents an ideal business opportunity. As a result, we have established local subsidiaries in Malaysia, Taiwan, Indonesia and Thailand since October 2011, whereby establishing a solid foundation for sales in the region to complement our existing presence in Hong Kong and Singapore. We have also established a local subsidiary in Australia, marking our first in the Oceania region. Going forward, we will seek to boost sales further in the region through our local subsidiaries by accurately capturing market needs, developing and improving products to suit these needs, and pursuing a marketing strategy tailored to each market.

History of local subsidiaries in Southeast Asia /Other Regions
June 2002
Established Kobayashi Pharmaceutical (Hong Kong) Co., Ltd.
October 2009
Established Kobayashi Pharmaceutical (Singapore) Pte. Ltd.
October 2011
Established Kobayashi Healthcare (Malaysia) Sdn. Bhd.
November 2011
Established Kobayashi Pharmaceutical (Taiwan) Co., Ltd.
April 2012
Established PT. Kobayashi Pharmaceutical Indonesia
March 2013
Established Kobayashi Healthcare Australia Pty. Ltd.
June 2013
Established Kobayashi Healthcare (Thailand) Co., Ltd.
Packaging used for ourcooling gel sheet for the forehead in Southeast Asia

Packaging used for our cooling gel sheet for the forehead in Southeast Asia

We have modified the brand name and packaging design to better suit each country and region (From left: Singapore, Thailand, Hong Kong and Indonesia)

Our Brands in Southeast Asia/Other Regions

OTC Pharmaceuticals

Anmeiru
An external anti-inflammatory on the market for early four decades

Anmeiru

Cooling gel sheets

KOOL FEVER
Marketed to soothe fevers and as a heat relief remedy the equator

KOOL FEVER

Eye glasses cleaners

Clearwipe
Garnering support from consumers in Australia where people wear sunglasses more often because of their proximity to the equator

Clearwipe