COSMOS Pharmaceutical Corporation

In selling pharmaceuticals and other products, the Group is required to obtain permits, registrations, and notifications from each prefecture, and depending on the content of future regulatory revisions, this could affect business performance. Since laws and regulations related to pharmaceutical sales are directly tied to the foundation of the business, continuous response to regulatory changes is required.

New store openings or floor space expansions exceeding 1,000 square meters require review by prefectures and government-designated cities under the "Large-Scale Retail Store Location Act." While the Group's policy is to actively expand large-format stores, depending on property acquisition and the progress of the review process, changes or delays to store opening/expansion plans may occur, potentially affecting business performance. The Group strives to comply with laws and regulations while coordinating with local residents and municipalities.

As the Group pursues active multi-store expansion, if difficulties arise in securing and training personnel commensurate with the pace of store expansion, this could lead to a slowdown in the pace of store openings or a decline in customer service, potentially affecting business performance. The Group is conducting active recruitment activities alongside a wide range of training programs from new employees to management positions.

The Group operates under a lean, elite management structure enabling rapid decision-making, with the Representative Director and other executive officers playing important roles in management. If a situation arises in which one of them suddenly becomes unable to perform their duties, this could lead to a decline in decision-making functions and affect business performance. The Group is working to mitigate this risk by developing the next generation of executive management.

The law requires that qualified personnel, such as pharmacists or registered sellers of pharmaceuticals, be engaged in pharmaceutical sales and Dispensing Pharmacy Business operations, making the securing of such qualified personnel an important issue in advancing store expansion. Depending on the status of securing qualified personnel, there may be constraints on new store openings or disruptions to the operation of existing stores, potentially affecting business performance.

The Group's basic policy is to open stores on leased properties, and as of the end of the current consolidated fiscal year, it has provided leasehold deposits of ¥16,368 million (3.1% of consolidated total assets), construction cooperation funds of ¥4,460 million (0.8% of the same), and guarantee deposits of ¥670 million (0.1% of the same). Economic failure of the depositee or other factors could result in partial or total non-recovery, and in the event of early termination before the expiration of the contract term, funds may not be returned depending on the contract terms.

If a natural disaster such as an earthquake or typhoon occurs in an area where the Group operates and causes physical damage to stores or other facilities, or if an accident affecting business partners or the distribution network occurs, this could affect business performance. Since the Group conducts multi-store expansion over a wide area, there is also an inherent risk that a large-scale disaster in a specific region could simultaneously damage multiple stores.