Cawachi Drug

Basic Information

Stock Code
2664
Industry
Retail Industry
Category Detail
Specialty Stores & Drugstores
Prefecture
Tochigi Prefecture
Establishment Year
April 1967
Listing Year
September 2000
Official Website
https://www.cawachi.co.jp/
TSE Information
TSE Information
Yahoo! Finance
Yahoo! Finance
Other Companies
Sun A, MatsukiyoCocokara & Company, Welcia Holdings, Create SD Holdings, Win Partners, Cosmos Drug Products, ZOA, Tsuruha Holdings, Kusuri no Aoki Holdings, Hogi Medical, Daisan, Sugi Holdings, Yakuo-do Holdings, Genky DrugStores, CSP, Nac, Makiya, Sundrug

Overview

Cawachi Drug is a drugstore chain founded in 1967, centered in eastern Japan with large suburban stores, handling a wide range of daily necessities, and featuring suburban mega-stores as its strength.

Current Situation

Cawachi Drug achieved consolidated sales of 284.5 billion yen, operating profit of 10.6 billion yen, and net profit of 7.1 billion yen for the fiscal year ended March 2021. Centered in the eastern Japan region, it operates 6,000–10,000 tsubo-scale suburban roadside stores, with average annual sales per store about 4 times the industry average. In addition to pharmaceuticals, it features a diverse assortment including daily consumables, cosmetics, childcare products, small home appliances, and food (excluding fresh foods). Through its 2001 business alliance with Sundrug and subsidiary acquisitions in 2006 and 2014, it successfully strengthened its base in northern Kanto. Although cited for violation of the Premiums and Representations Act, it has thoroughly implemented recurrence prevention measures and strives to restore trust. Moving forward, it will continue developing large stores, aiming for sustainable growth through community integration and enhanced customer satisfaction.

Trivia

Interesting Facts

  • Average annual sales per store reach about 4 times the industry average.
  • Opened Japan's first pharmacy-attached mega drugstore in 1996.
  • General food sales ratio is about 3 times the drugstore industry average.
  • Headquartered in Oyama City, Tochigi Prefecture, operating in eastern Japan.
  • Founded in 1960 and incorporated in 1980.
  • Business alliance with Sundrug secured foothold for Tokyo metro area entry.
  • Kawachi family as major shareholders ensures stable management and regional contributions.
  • Received prefectural corrective order in 2010 for Premiums and Representations Act violation.
  • Stores centered on large formats about 4 times industry average size.
  • Drugstore handling wide range of cosmetics, daily goods, and foods.

Hidden Connections

  • Strengthened linkage between Tokyo metro area and local areas in eastern Japan through Sundrug alliance.
  • Community-based management backed by investments from founder family foundations like Kawachi Scholarship Foundation.
  • Achieved differentiation from competitors via mega store development with pharmacies.
  • Unusually high 45% ratio of general foods (excluding fresh) in drugstore industry.
  • Headquarters in Oyama City, Tochigi Prefecture, serves as core of local economy.
  • Post-alliance, built complementary store relationship with Sundrug.
  • Expanded presence mainly in northern Kanto through subsidiary acquisitions for management stability.
  • Focus on enhancing corporate governance and transparency as Prime Market-listed company.

Future Outlook

Growth Drivers

  • Expansion leveraging strength in large suburban stores in eastern Japan
  • Addressing growing regional medical needs with pharmacy-attached services
  • Strengthening collaboration with alliance partners like Sundrug
  • Improving profitability through diversification in daily necessities and foods
  • Enhancing sales efficiency and customer convenience via digital technology

Strategic Goals

  • Maintain and improve profitability per store
  • Expand regional medical network via pharmacy business
  • Actively introduce sustainable sales channels
  • Enhance brand value through stronger community ties
  • Strengthen corporate governance emphasizing compliance and transparency

Business Segments

Pharmacy Services

Overview
Provides pharmacy services specialized in regional medical support.
Competitiveness
Large-scale suburban store-attached pharmacies
Customers
  • Individual Patients
  • Clinics
  • Hospitals
  • Nursing Facilities
Products
  • Prescription Dispensing
  • Medication Guidance
  • Pharmaceutical Supply Management

Pharmaceutical Distribution

Overview
Deploys efficient pharmaceutical distribution services centered in eastern Japan.
Competitiveness
Community-based logistics network
Customers
  • Retail Chains
  • Pharmacies
  • Medical Institutions
Products
  • Pharmaceutical Wholesale
  • Medical Equipment Supply
  • Logistics Management

Health & Beauty Care Product Supply

Overview
Deploys wholesale and sales promotion services for beauty and daily products.
Competitiveness
Diverse product handling and promotion expertise
Customers
  • Drugstores
  • Mass Retailers
  • Local Retailers
Products
  • Cosmetics Wholesale
  • Daily Goods Wholesale
  • Promotion Support

Food Wholesale

Overview
Engages in wholesale of foods excluding fresh produce.
Competitiveness
Logistics leveraging 45% general food ratio
Customers
  • Supermarkets
  • Retailers
  • Restaurants
Products
  • General Food Wholesale
  • Food Distribution Management
  • Product Planning

Store Development Consulting

Overview
Store development support services specialized in large stores.
Competitiveness
Proven track record in mega drugstore operations
Customers
  • Franchise Partners
  • New Entrants
Products
  • Site Surveys
  • Store Design Support
  • Operational Know-How Provision

Competitive Advantage

Strengths

  • Deployment capability of large suburban roadside stores
  • Wide product lineup
  • High sales per store exceeding industry average
  • Community-based business deployment
  • Pioneering pharmacy-attached store model
  • Stable management base and sound finances
  • Synergies from alliance with Sundrug
  • Strong shareholder structure by local Kawachi family
  • Business expansion via multiple subsidiaries
  • Multi-channel customer touchpoints

Competitive Advantages

  • Sales per store about 4 times industry average, high profitability
  • Rarity of deploying large mega drugstores mainly in eastern Japan
  • General food ratio about 3 times industry average for differentiation
  • Secured foothold for Tokyo metro area entry via Sundrug alliance
  • One-stop service via pharmacy-attached model
  • Product mix and store deployment tailored to local needs build solid customer base
  • Strong shareholder structure supporting sustainable management
  • Superior agile product deployment and customer attraction in large stores
  • Multi-channel sales network including online and direct sales
  • Established compliance system for accurate labeling amid regulatory changes

Threats

  • Intensifying competition and price wars in drugstore industry
  • Market contraction risk from population decline and aging
  • Increased operational burden from stricter laws and regulations
  • Shift in traditional sales channels due to e-commerce rise
  • Reputation risk from Premiums and Representations Act violations
  • Competitive pressure from new entrants and other retail formats
  • Impact of rising raw material costs
  • Vulnerability in logistics and store operations during disasters
  • Geographical risk of regional concentration model
  • External economic factors such as exchange rate fluctuations

Innovations

2023: New development of large mega drugstores

Overview
Aggressively expanding 6,000–10,000 tsubo suburban stores to maximize customer draw.
Impact
Achieved high profitability with annual sales per store about 4 times higher.

2022: Expansion of pharmacy-attached stores

Overview
Increased stores with attached pharmacy spaces to improve convenience.
Impact
Addresses regional medical needs and enhances customer satisfaction.

2021: Deepening business alliance with Sundrug

Overview
Achieved cost reductions through joint procurement and logistics optimization.
Impact
Improved earnings structure and strengthened market competitiveness.

2020: POS system upgrade for sales efficiency

Overview
Enhanced customer purchase data analysis with latest technology.
Impact
Achieved sales growth and proper inventory management.

Sustainability

  • Promoting energy-saving and LED lighting in stores
  • Advancing recycling to reduce waste
  • Participating in environmental conservation activities in collaboration with local communities
  • Enhancing consumer trust through proper labeling and transparency
  • Initiatives for employee health and better working environment