Wednesday, March 16, 2011
No. 5: The greatest asset of a company (March 17, 2011)
Takeda Pharmaceutical is the runaway leader of the Japanese pharmaceutical industry. Takeda completed a new research base in Kanagawa Prefecture on February 19, 2011. The new research base is one of world’s largest research bases in the pharmaceutical industry, and 1,200 researchers will move to this base within the year. Japanese leading pharmaceutical companies including Takeda mostly originate from drug sellers authorized by the Tokugawa government in the Edo Period (1603-1867). Takeda is not the oldest, but it is Takeda that introduced western drugs to the Japanese market for the first time in the Meiji Period. Back then, drugs were Japanese and Chinese drugs in Japan. The first generation opened business in Osaka in 1781 and steadily expand sales, and the second generation increased the presence in the drug selling business dramatically.
In the Edo Period, business ethics did not allow drug sellers to take customers from competitors. Neither the concept nor the method of advertising existed. That is, there was no way left but to wait for buyers to come in. Takeda needed something to characterize it because it was not the oldest. It selected information as a means to differentiate it from others. It exerted much energy on information collection and kept customers informed of the latest market conditions. Takeda’s efforts produced fruits. It grew famous among customers, both existing and prospective, that they were able to get not only products but also various kinds of information from Takeda. Thereafter, it became Takeda’s DNA to get precise and high quality information to keep customers informed of the latest information on the market and industry.
The import drug market grew steadily, and the fifth generation started drug production to make his company an integrated pharmaceutical company. It can safely be said that the courageous decision made by the fifth generation built up a foundation of further growth. What should be noted here is that he established the laboratory and product test division in the newly-built manufacturing plant. Takeda’s moves agreed with Japan’s decision to strengthen its heavy and chemical industry to become independent of foreign countries. Import of western drugs suddenly stopped because the First World War broke out in Europe in 1914. Discontinued import affected drug sellers very favorably because the prices of western drugs soared rapidly and tremendously, allowing them to get enormous profits.
With the windfall profits, some drug sellers branched out into business fields totally unrelated to the main business. Some founded a steamship line, and some started candy production. However, Takeda invested the profits only in pharmaceutical production facilities without paying attention to other business fields. The new plant was completed in 1915, and it was then a very advance production plant with state-of-the-art equipment. Takeda subsequently invested actively in R&D, and grew to be a modern pharmaceutical company with three divisions of production, R&D, and product testing. Now, Takeda is the leading pharmaceutical company that Japan can boast to the world. The new research base makes it clear that Takeda’s DNA has remained unchanged.
The Takeda’s case shows a lesson that a company should not forget its DNA. You have to keep in mind that the DNA instilled and cultured in your company for a long period is the greatest asset and the important criterion by which your customers evaluate your company. Think about GM. Is the financial and credit business the DNA left by the great Alfred Sloan?