Pharmaceutical Pioneer Continues Soothing Japan’s Ills in Its Fifth CenturyEconomy Society
Pastoral Roots in Tochigi
More than four centuries ago, a traveling monk succumbed to fatigue and collapsed before the gate of a house in Takanezawa in what is now Tochigi Prefecture, north of Tokyo. The members of the household took him in and nursed him assiduously, but he eventually expired. Before breathing his last, however, he handed his caregivers a book in appreciation for their kindness. Inside, there was a description for formulating a miraculous remedy.
This is the legend behind kyūmeigan, a kanpō (traditional Chinese medicine) formulation, which became and remains a popular remedy in Japan for small children’s nocturnal crying. The Utsu family began producing the concoction commercially sometime around 1600. Utsu Gonemon had served the powerful Utsunomiya clan as a physician. That clan, however, ran afoul of Japan’s preeminent warlord, Toyotomi Hideyoshi, and Gonemon withdrew to a life of farming in Takanezawa in 1597. He apparently also served the community as a physician, which led to the venture in producing kyūmeigan.
The Utsu family produced and marketed its kanpō medicine through the company that now operates as Uzukyūmeigan. The family-run enterprise moved its headquarters to Tokyo in 1931, when it became a joint-stock company. In the same year, it adopted the name Utsukyūmeigan for its flagship product. The company then changed the reading of the product name to Uzukyūmeigan in the 1960s, as it had begun advertising heavily on radio and television, and management believed that the latter reading would register better with broadcast audiences.
Uzukyūmeigan continues to conduct its manufacturing at the Takanezawa site where the company was founded. The plant occupies 3.3 hectares of wooded terrain and comprises a cluster of buildings evocative of Uzukyūmeigan’s sixteenth-century beginnings.
“The Utsunomiya clan participated in the Japanese invasion of Korea in the 1590s,” observes Uzukyūmeigan Senior Managing Director Utsu Yoshiyuki, eldest son and heir apparent to President Utsu Yoshihiro. “We can well imagine, though this is merely conjecture, that the Utsunomiya contingent could have brought back Chinese herbal medicines and formulas.”
Exactly how Utsu’s predecessors obtained the formula for their medicine remains a mystery, but that they protected it carefully is a well-documented facet of company lore. Only the patriarch possessed detailed knowledge of the formula, and he bequeathed it only to his eldest son. For several generations, the Seiiken, a teahouse-like building on the plant grounds, has been the venue for passing on the formula. Nearby are the company museum and the historic Uzu Yakushidō medicine shrine, enriching the ambience of pharmaceutical and cultural heritage.
Repeated Doses of Adversity
Uzukyūmeigan initially promoted its medicine for a full range of ailments in people of all ages, sometimes distributing it free of charge. The medicine gained a vast following and was always available in inns and taverns throughout the land. People said that a single capsule of the medicine was worth as much as a large bag of rice.
Modern marketing of Uzukyūmeigan’s product began in 1906. A large Tokyo-based wholesaler of pharmaceuticals began handling the medicine, initiating the positioning for the product that has endured: a remedy for small children’s nocturnal crying.
“Dietary standards were poor in Japan back then,” explains Yoshiyuki. “Our medicine alleviated some of the discomfort that children experienced as a result of inadequate nutrition.”
Uzukyūmeigan used its surging cash flow to fund diversified investment in ventures in finance, rail transport, fertilizer production, and a private school. It encountered challenges, though, as copycat competitors proliferated in a market not yet equipped with modern patent protections. An even bigger challenge arose, meanwhile, with the Shōwa Financial Crisis of 1927. That crisis crimped the company’s cash flow severely, obliging it to withdraw from its diversified ventures and to sell the marketing rights for its medicine.
After Uzukyūmeigan became a joint-stock company in 1931, the new entity focused narrowly on producing the flagship medicine. Its branding mobilized modern imagery, such as Western girls and even Santa Claus. The strategy proved effective, and the company regained business momentum.
Sales at Uzukyūmeigan surged as much as threefold annually during Japan’s postwar baby boom. Management allowed costs to slip out of control, however, and only assistance secured from another pharmaceuticals company in 1955 enabled Uzukyūmeigan to survive. Once again, restructuring revitalized the company. Annual sales resumed growing and peaked at about ¥2 billion around 1970.
“A look at our financial statements reveals two life-threatening crises over a 30-year span in the twentieth century,” Yoshiyuki reflects. “Both times, we survived thanks to assistance from an industry counterpart.”
Uzukyūmeigan’s resilience is testimony to the continuing strong demand for its namesake product. Interestingly, it shares that demand with another company that has been in business for about four centuries, Hiya Pharmaceutical. The latter, based in Osaka, produces and markets a medicine similar to Uzukyūmeigan’s nocturnal-crying remedy, Hiyakiōgan. It maintains a large market share in western Japan, whereas Uzukyūmeigan is strong in the easterly parts of the nation.
The formula for Uzukyūmeigan has changed hardly at all over the centuries. Chief among the active ingredients are musk and dried bovine gallstones, for steadying the nerves and fortifying the heart, and carrots and licorice root, for aiding digestion. What has changed is the company’s adoption of state-of-the-art equipment to produce the medicine in accordance with Japan’s pharmaceutical regulations.
A Demographic Challenge
Uzukyūmeigan President Utsu Yoshihiro expresses confidence in the long-term sales potential for his company’s flagship product. “We conducted a survey a few years ago of mothers who were raising infants,” he recalls. “The biggest concern voiced by the respondents was uncontrollable crying. Our information society imposes mounting stress on infants, just as it does on adults. That accounts for a lot of the irritability seen in infants and for the phenomenon of nocturnal crying. Parents will continue to welcome our remedy for addressing those problems.”
Yoshihiro accompanies his professed confidence with the frank acknowledgement of new and daunting challenges. “The number of children is declining,” he laments. “Meanwhile, family-run drugstores, traditionally our main sales channel, are giving way to large chains, and parents are less inclined than in the past to give medicine to their children.”
The numbers bear out the president’s concern. Annual sales at Uzukyūmeigan have hovered between ¥300 million and ¥400 million in recent years—one-sixth of their peak. In an era of more-robust economic and demographic growth, the company could flog sales successfully with aggressive TV advertising. But those days are gone, and the company aired its last TV commercial five years ago.
“Our corporate sustainability,” cautions Yoshihiro, “hinges on adapting our business to changing times.” Thus has Uzukyūmeigan developed business beyond its nocturnal-crying remedy. Thirty years ago, the company obtained nearly all of its sales from its flagship product. It has since broadened its sales portfolio with a children’s cold medicine launched in the mid-1980s and a children’s skincare lotion—also usable by adults—launched in the mid-1990s. Today, the two newer products together generate about 70% of annual sales.
The latest round of diversification differs strikingly from the company’s earlier experience with diversified investments 110 years ago. Whereas the earlier diversification reached far beyond Uzukyūmeigan’s established expertise, the company’s new products occupy familiar kanpō territory. Yoshihiro insists, however, that his company needs to broaden its horizons.
“This is a time for blazing new trails,” the president declares. “We need to remain true, of course, to our traditional commitment to serving others. But we need to transform our company to remain relevant.”
Responsibility for carrying out the transformation espoused by Yoshihiro will reside, presumably, with his 37-year-old heir-apparent Yoshiyuki. The latter echoes his father’s sense of urgency about broadening the company’s horizons. And he cites the 2015 launch of a remedy for heatstroke as a step in that direction.
“The new product incorporates the expertise we have accumulated with our Uzukyūmeigan remedy,” explains Yoshiyuki . “It’s a kanpō formulation for ages from three months to adult. People bought up tens of thousands of packages as soon as the medicine went on sale. Global warming is having an effect, and summers are becoming unbearable. We’ll be ready with lots more early next summer.”
Uzukyūmeigan is also broadening its horizons in distribution, most notably in Internet marketing. The company’s Internet sales in the latest fiscal year were up some 50% over the previous year. “Our interim goal,” reveals Yoshiyuki, “is to get our annual sales back up to ¥1 billion.”
Strengthening community ties is part of management’s strategy for revitalizing Uzukyūmeigan. The company’s plant is near the region hardest hit in March 2011 by the Great East Japan Earthquake. In the wake of that disaster, the company resumed hosting a lantern festival on the plant grounds. The festival had taken place there annually until the mid-twentieth century. Its resumption is emblematic of the renewal under way at Uzukyūmeigan.(Originally written in Japanese by Kikuchi Masanori of Nippon.com and published on January 12, 2016. Banner photo: Uzukyūmeigan’s president, Utsu Yoshihiro (left), and his eldest son, Senior Managing Director Utsu Yoshiyuki, express a shared sense of urgency about broadening their company’s horizons.)