Full Year 2019 CMIC Holdings Co Ltd Earnings Call
Tokyo Dec 6, 2019 (Thomson StreetEvents) -- Edited Transcript of CMIC Holdings Co Ltd earnings conference call or presentation Thursday, November 14, 2019 at 10:59:00am GMT
TEXT version of Transcript
* Kazuo Nakamura
CMIC HOLDINGS Co., Ltd. - Founder, Chairman & CEO
* Keiko Oishi
CMIC HOLDINGS Co., Ltd. - President, COO, Supervisory Manager of Business Development & Marketing & Representative Director
* Wataru Mochizuki
CMIC HOLDINGS Co., Ltd. - CFO, Executive VP, Supervisory Manager of Administration & Support Unit and Corporate Director
Good morning, everyone. We like to thank you for participating in this event despite your busy schedule. Now CMIC Holdings will hold a financial result briefing for the fiscal year ending on September 30, 2019. Now I'd like to introduce our presenters today: CEO Kazuo Nakamura; COO Keiko Oishi; CFO Wataru Mochizuki.
Today, we will have financial results for the fiscal year ended September 30, 2019 from CFO Mochizuki, the progress of the midterm plan from COO, Oishi, and healthcare revolution from CEO Nakamura. We are scheduled to end at 10:30 a.m.
Now CFO Mochizuki will explain the company's financial results for the fiscal year ending on September 30, 2019.
Wataru Mochizuki, CMIC HOLDINGS Co., Ltd. - CFO, Executive VP, Supervisory Manager of Administration & Support Unit and Corporate Director 
Good morning. Let me present the overview of our financial results for the fiscal year ending on September 30, 2019. First of all, I'd like to introduce the overview of the CMIC Group. CMIC Group is promoting our unique business model, PVC or Pharmaceutical Value Creator, to 5 business areas.
As indicated by the diagram, we comprehensively support the value chain of pharmaceutical companies from drug discovery, development, manufacturing to sales and marketing. In addition, we also provide a platform-type pharmaceutical business, IPM or Innovative Pharma Model, in the Healthcare business to create individual health values.
Our group consists of total 45 bases in Japan, including 4 manufacturing bases and 6 R&D bases, in addition to 15 overseas bases in Asia and United States. As you can see, we are expanding globally.
Please take a look at this table for our business segments and their corresponding group companies as of the end of September 2019. Our group consists of 28 companies in total, including the holding company, CMIC Holdings; 25 consolidated subsidiary inclusive of 14 overseas affiliates; and 2 equity-method affiliated companies.
Here is a summary for the fiscal year ending on September 30, 2019, to achieve sustainable growth in the healthcare and the pharmaceutical industry at this time of change. CMIC Group is pushing forward Project Phoenix. In addition, in order to achieve the mid- to long-term improvement of corporate value of our group, the 3-year midterm plan has started from this fiscal year. That includes focus activity items such as the acceleration of PVC model, the promotion of globalization and the creation of a Healthcare business. As a group-wide effort, CMIC continues to develop new business and services.
This is a summary of consolidated income statement. The sales for this term grew 6.4% year-on-year to JPY 74.373 billion. The operating income increased by 1.9% year-on-year to JPY 4.405 billion. The ordinary income decreased by 5.4% to JPY 3.841 billion due to foreign exchange losses and the share of loss of entities accounted for using equity method. The profit attributable to the shareholders of the parent company for this term was JPY 1.822 billion. The reason for the increase in the current net income compared to the previous term is that in the previous term, there was an impact of the reversal with the deferred tax asset after CMIC CMO, a fully owned subsidiary of CMIC Holdings, became a joint venture. This year, we had no such impact. The earnings per share is JPY 98.93.
Next is the breakdown of nonoperating and extraordinary income or loss. While the nonoperating income such as rent income and others recorded JPY 97 million, the nonoperating expenses such as interest expenses, foreign exchange losses and the share of loss of entities accounted for using equity method recorded JPY 661 million. For the extraordinary income, we recorded a JPY 14 million as gain on sales of noncurrent assets. And as for the extraordinary losses, we recorded JPY 409 million as the impairment loss and loss on retirement of noncurrent assets.
This table shows sales and operating income by segment. CRO, CDMO and the Healthcare businesses recorded increases in operating income, which make up for the decrease in profit by CSO and IPM businesses.
This table shows orders received and backlog. While the orders received and backlog for the CRO business slightly decreased compared to the previous year due to the impact of the development plan changes by customers, the orders received and backlog for the other businesses remain strong. For the CDMO business, the only firm orders are included in the orders received and backlog, and the annual order plans proposed by customers are excluded.
This shows a trend in consolidated sales and operating incomes. We continue to achieve an increase in income and in profit for this current term, which renewed a record high sales and operating income. The operating profit ratio was 5.9%.
This shows a trend in CRO sales and operating income. For clinical services, we are enhancing CMIC Group's comprehensive contracting capabilities, which are our strength, ranging from consultation for overseas companies entering the Japanese market and the non-healthcare companies entering the healthcare sphere to pharmacovigilance services. Further, we are promoting globalization through activities including the establishment of our local affiliates in Australia.
For non-clinical services, we are providing drug discovery support for advanced medicine, including nucleic acid drugs and regenerative medicine. We have concluded our partnership agreement with the Japanese entity of Sophion Bioscience, the global pioneer in ion channel-related business, in October 2018 to expand the safety pharmacology services. The sales exceeded those over the previous year, thanks to the steady execution of both new and existing projects.
As for operating income, while JPY 472 million was recorded as expenses following the change in how to calculate the retirement benefit obligation in the fourth quarter, we achieved an increase in profit. The sales for this term increased by 3.7% to JPY 38.660 billion. The operating income was JPY 6.899 billion, and the operating profit ratio was 17.8%.
This shows a trend in CDMO sales and operating income. In the current fiscal year, CDMO business is further improving technical capabilities, developing low-cost production structure and enhancing competitiveness through strategic capital investments as a global pharmaceutical drug manufacturing platform that includes formulation design, investigational drug manufacturing and commercial production. In addition, the new parenteral drug manufacturing facility in Chicago with the capabilities to formulate high-potency drugs has started the clinical trial material production and is enhancing the sales activities to win both clinical trial materials and commercial drugs manufacturing orders.
In March 2019, CMIC has concluded business alliance agreements with a U.S.-based corporation possessing 3D printing technology platform and a sophisticated flexible dosing tablet technology to introduce new technologies for drug manufacturing and improve our formulation technologies. In June 2019, CMIC CMO has succeeded the Nishine Plant from Astellas Pharma Tech, Astellas' production subsidiary in Japan, and CMIC CMO Nishine has started its operations to increase the manufacturing capability for solid formulation, which is their main dosage form. The sales exceeded those of the same period last year mainly due to CMIC CMO Nishine's new contributions and the increase of contracted production sales in Japan and the U.S. The operating income exceeded that of the same period last year, thanks to the fact that Ashikaga plant's deficits were covered by surpluses of the other Japanese and overseas plants. The sales of the CDMO business increased by 12.4% to JPY 17.292 billion, and the operating income was JPY 116 million.
This shows a trend in CSO sales and operating income. In the current fiscal year, in addition to the medical representative or MR dispatch service, CMIC Ashfield is providing comprehensive solution that combines multiple communication channels and various services, including the opening of MA academy, the first private sector institution to train medical affairs or MA personnel. The sales exceeded those of the same period of the previous year, thanks to the steady execution of new and existing projects. However, the operating profit was below that of the same period last year due to the preceding costs generated to take on new project and the costs associated with temporary standby reps. The CSO sales increased by 5.8% to JPY 7.929 billion. The operating profit was JPY 236 million, and the operating profit ratio was 3%.
This shows a trend in Healthcare sales and operating income. In the current fiscal year, we are further strengthening the oncology capability in the SMO operations, improving the quality of our operations and providing new services. In April 2019, BELL24-Cell Product, now Site Support Institute, became our group company to further enhance our presence in Hokkaido. As healthcare information services, we are providing information of clinical trials using the healthcare portal site and starting the SelCheck self-screening services for the early detection and prevention of disease aggregation. In June 2019, we succeeded harmo, the electronic prescription record service from Sony Corporation, to enhance patient support programs, including treatment adherence improvement and to create health support business utilizing technologies. The sales and operating income both exceeded those of the same period of the previous year, thanks to the steady execution of new projects. The Healthcare sales increased by 6.2% to JPY 7.660 billion. Operating income was JPY 881 million, and the operating profit ratio was 11.5%.
This shows a trend in IPM sales and operating income. The IPM business provides new business solutions to pharmaceutical companies that combine value chains and marketing authorization licenses possessed by our group. We are mainly delivering development and marketing services for orphan drugs and diagnostics. In our orphan drug business, OrphanPacific is selling orphan drugs, including products developed in-house. Further, we are strengthening the IPM business foundation through the provision of IPM platform, such as supporting foreign companies entering the Japanese market and providing strategic options to pharmaceutical companies in accordance with their business model changes.
In the diagnostic business, we are working to expand the markets and enhance promotions of the kidney disease biomarker, human L-type fatty acid-binding protein or LFABP kit, developed by CMIC Group. The sales exceeded that of the same period of the previous year due to the sales increase of orphan drugs. Although the operating loss was recorded due to R&D expenses, we are continuing to expand our business scale through the provision of new solutions and reduced product costs aiming for a positive turnaround. The IPM sales increased by 17.0% to JPY 3.368 billion. Although the operating loss was JPY 396 million, we are starting to see the benefit of providing IPM solutions as CMIC Group's strength that lead to new orders in CRO and other businesses.
Next, I'd like to explain our consolidated balance sheet. The total assets at the end of the current fiscal year increased by JPY 2.145 billion year-on-year to JPY 80.179 billion. This is mainly due to increase in inventories and fixed assets following the acquisition of CMIC CMO Nishine and a decrease in cash and deposits. The capital investment for the cumulative financial period is JPY 5.99 billion. The depreciation is JPY 3.620 billion, and the amortization of goodwill is JPY 308 million. The total liabilities increased by JPY 2.687 billion to JPY 47.185 billion mainly due to an increase of long-term unearned revenue following the acquisition of CMIC CMO Nishine. The total net assets decreased by JPY 541 million to JPY 32.994 billion mainly due to the retained earnings and the acquisition of own shares.
The net cash flow from operating activities was JPY 4.922 billion in gain with the increase in net income and depreciation and the corporate tax payment. The net cash flow from investing activities was JPY 4.889 billion in spending mainly due to the acquisition of fixed assets. The net cash flow from financing activities was JPY 1.764 billion due to the dividend payments and acquisition of own shares. As a result, the cash and cash equivalents as of the end of September 2019 was JPY 12.144 billion.
Next, I will explain the full year 2020 outlook. The sales forecast for the full year 2020 is JPY 81.5 billion, 9.6% growth from the previous year. The operating income is estimated to be JPY 4.90 billion, JPY 495 million increase from the previous year, which is expected to renew the record high operating income with the operating profit ratio of 6.0%. The ordinary income is estimated to be JPY 4.60 billion. The profit attributable to the shareholders of the parent company is JPY 2.30 billion, JPY 478 million increase from the previous year. And earnings per share is estimated to be JPY 127.26.
This is the full year 2020 sales and operating income outlook by business segment. We expect the sales and operating incomes to grow in all segments. As for our core CRO business, sales and operating income growth is expected, thanks to the continuing order intake for both clinical and non-clinical operations. The sales and operating income growth is also expected for the CDMO business, thanks to the on-year contributions by CMIC CMO Nishine, which started its operation in June 2019. The sales and operating income growth is also expected for the CSO business, thanks to the acquisition of new project and steady execution of existing projects. As for Healthcare business, thanks to the strong new order intake of SMO business and new business launches including harmo, the electronic prescription record service, we expect to see an increase in both sales and operating income. The IPM business is expected to see revenue increase driven by our orphan drug sales increase and a positive turnaround in operating profit by absorbing R&D expenses. In addition, as for adjustments, we expect to record expenses, including some prior investments associated with the Healthcare business creation.
That's all. Thank you very much.
Next, COO Oishi will explain the progress of the midterm plan.
Keiko Oishi, CMIC HOLDINGS Co., Ltd. - President, COO, Supervisory Manager of Business Development & Marketing & Representative Director 
Good morning. I'd like to explain the progress of the midterm plan. This is the 3-year midterm plan announced last year that started from fiscal year 2019. The plan defined 3 focus activities: the acceleration of PVC model, the strengthening of globalization and the creation of Healthcare business. The quantitative targets are JPY 85.5 billion in sales and JPY 6.8 billion in operating income in fiscal year 2021.
I will explain the progress over the first year of the plan and its activities. First, the acceleration of PVC model. CMIC receives a project from various clients, including pharmaceutical companies, bio-venture companies and academia. The project can vary, ranging from helping a part of the clinical trial work, supporting a company in a non-pharmaceutical industry and train their pharmaceutical business, assisting overseas companies with no presence in Japan entering the Japanese market, to providing support for the out-license strategy of our drug.
In order to meet clients' needs while enhancing our group's comprehensive capability, we are working to improve the ratio of PVC projects where multiple functions are involved in a single project. In the previous term, the PVC project accounted for 11% to the sales. We are aiming to increase our ratio to 20% in fiscal year 2021. In the fiscal year 2019, the ratio increased by 6% year-on-year to 17%. This is because the volume of supporting work from the early phase of development, including consulting services, has increased. For instance, we are consulted by overseas companies for their development in Japan, thanks to our track records of marketing drugs in the IPM business as well as receiving clinical trial work based on our support for that non-clinical work. For our latest modality, we have also provided support through our consulting team, consisting of medical device, IVD, generic testing and regenerative medicine consultants.
This is a landscape of our CRO business, which is a core of PVC model. We are also enhancing globalization and database utilization as they are advancing. In fiscal year 2019, we established a local affiliate in Australia in order to increase regional competitiveness in Asia and Oceania. In Australia, there is an environment that makes it easier to conduct the clinical trials targeting various ethnicities, including Caucasian and Asian subjects. Also, the country is in compliance with the international standards and, therefore, advantageous in taking advantage of data obtained to use for submission in Europe and the U.S. In addition, Australia gives favorable tax incentives to R&D expenses and, therefore, is expected to see more clinical trials going forward. Under these circumstances, we are going to meet client needs through the local affiliate. Also, we are enhancing post-marketing surveillance and clinical research support businesses using medical databases as well as promoting readiness for evolving fields. As the CRO business is our core business, we will continuously work on it for robust growth by adapting to changes in the development trend.
This is about the CDMO business. As Mr. Mochizuki just explained, in the CDMO business, we succeeded the Nishine Plant from the Astellas Pharma Tech in June 2019. Currently, CMIC Group provides total solution for pharmaceutical manufacturing at 6 sites in total, including 4 sites in Japan and 1 each in the U.S. and South Korea. The parenteral drug manufacturing facility established at the Ashikaga plant has become operational since October 2018. However, its production is to start in a phased manner, and therefore, the level of operation in 2020 will not be full yet. It is expected to improve in 2021. Also, in the U.S., as business opportunities are on the increase, including those with Japanese pharmaceutical companies, we have decided to expand the production capacity in 2020. With these activities, we are aiming to grow the CDMO business from 2021.
Now the CSO business. It is ranked second in the contract medical sales representative market in the industry. We are promoting the provision of comprehensive solutions that combine multiple communication channel and various services by reacting to the diversification of pharmaceutical companies' promotion activities. One of them is medical affairs solution. The medical affairs work requires high-level expertise in academic knowledge in the specific therapeutic area. And taking advantage of our consulting and rapid dispatching experiences, we opened MA academy, the first private sector institution to train medical affairs personnel. As it garnered strong attention from pharmaceutical companies, we are planning to further expand the services in this arena.
Now the Healthcare business. In the SMO business, we are enriching our capability in therapeutic areas as well as the network of medical institutions by, for example, acquiring our SMO in Hokkaido as a subsidiary in order to provide support for more quality and speedier clinical trials. Also, in the Healthcare business, we are working on activities to create new businesses. In January 2020, we will merge 2 healthcare companies of ours with the aim of integrating a variety of information and know-how accumulated through the SMO business and disease prevention and health information and IT technology that CMIC Healthcare possesses in order to accelerate the creation of Healthcare businesses. This business generates prior investments to create new businesses during the midterm plan period, and we will aim for an early update in collaboration with other industries and companies.
Now the IPM business. OrphanPacific was established in May 2012, a joint company of CMIC Group and the MEDIPAL Group. It sells 7 products, including 4 OrphanPacific drugs approved by the Japanese government. The company helps portfolio expansion of existing products, such as additional indications and formulation changes as well as introducing new orphan drugs and providing support for overseas companies entering the Japanese market. As the number of business inquiry is increasing as it provides a unique solution business, positive turnaround can be expected for 2020. We will ensure profitability by further improving its efficiency throughout 2021.
Now I'd like to explain the CRO business and our globalization activities. For globalization, we are engaging in 2 types of operations: Japan operations and outside Japan operations. For Japan operations of the CRO business, we have already been responding globally to a substantial extent. The ratio of global trials accounts for 60%, and that of sales from foreign clients in the global trials reaches 80%. Based on this experience, we will provide services with quality, speed and a fair price that meet clients' needs as well as driving PVC, our group's unique business model, and providing support for trials by utilizing our unique network in a wide range of spaces.
On the other hand, for outside Japan, we have overseas footprint, mainly in Asia and Oceania. We will promote globalization, covering a wide range of areas in both business area and size, including providing support for data submission for drugs intended for the European and the U.S. markets and further expanding into the Chinese market, which is the world's second largest pharmaceutical market.
Lastly, I'd like to touch upon the progress of quantitative targets from the midterm plan. As you can see, in order to achieve the fiscal year 2021 target based on the fiscal year 2020 plan, further growth in operating income is necessary. For this, the challenge, in particular, will be to ramp up orders to the new parenteral drug facility at the Ashikaga plant. We think that we will be able to achieve the quantitative targets by turning each business inquiry currently in negotiation into business orders as well as ensuring profitability in the IPM business that is ready to positively turn around.
Next, CEO Nakamura will explain about healthcare revolution.
Kazuo Nakamura, CMIC HOLDINGS Co., Ltd. - Founder, Chairman & CEO 
I am Nakamura. So healthcare revolution. Our French employee, Philippe, often says that in France, revolution is achieved by sending someone to the guillotine. Otherwise, it will not be a revolution. Anyway, I believe that it should be a healthcare revolution, not innovation. I will explain more later, but something serious is happening now. The 100-year life with this is the binary of being healthy and being ill still valid. The majority of people with diseases in their later years, which means that a different indicator is needed. For me, the indicator is ikigai or the reason to live. And I'm thinking about business that supports people's ikigai.
Another thing to consider is the lack of financial resources. We don't have sufficient financial resources. Lately, some treatment whose cost is over JPY 100 million has come out. The question is who is going to pay, who is going to receive these treatments and whether it can be handled within the current universal healthcare system. I think it's already difficult to deal with it in the existing system. We also have treatment apps from the perspective of drug price. Treatment apps are not drugs. Then what shall we do?
Another realistic issue is that the number of young people who support the elderly is decreasing. And now in Japan, there are some areas with no access to hospitals. And even when there is a hospital, the doctor is over 80 in age. Under these circumstances, can the existing healthcare still work?
In addition, there is a shift from national to local for bundling elderly care in healthcare, but indeed, there is much confusion on the low-cost side. This is because the low-cost side does not know what to do and where to find the financial resources. With this background, I trust a revolution is needed, who are transforming the existing framework and rebuilding it in a completely different system.
Then a question might arise as to how the CRO business in healthcare become confluent. Indeed, one of the activities done by CRO is standardized treatment. For example, we standardized the treatment of asthma in the world through a global trial. Another thing is that CRO uses most advanced technologies, such an advanced treatment against a special cancer that is categorized through genomics. This is one of the advanced treatments that CRO is involved in.
On the other hand, it is necessary to reduce development costs to achieve this. Virtual clinical trials have been initiated. It is called a virtual clinical trial in a way, and it does have an impact. The impact comes from digitalization and IT tools to provide support and transform the healthcare system. Therefore, the healthcare revolution and CRO that I am going to talk about is that, indeed, healthcare and the CRO are not something completely different, but rather, they create a new form of healthcare system. In this sense, I think they are something close to each other.
I talk to everybody of calling the paradox of Japan, the country with the highest longevity rates. But anyway, Japan did not enjoy such a longevity rate back in the '60s among the developed countries. And with the care insurance, the eradication of the infectious diseases and more control, Japan gradually started to join the countries with the high longevity rates.
Please look at this data. The median life expectancy had further increased since, according to the 2010 data, and here's a big problem. So what will happen to the median life expectancy around 2050? These are the estimated life expectancies of G7 countries, and it will be around 83 of age for Japan for both men and women, according to the government. However, the academic journal, Nature, says it will be 91 or 92. If the median life expectancy is 91, that means that there will be a lot of 100-year-old elderly people. You can live to be 100 of age physically, but we haven't seen much progress in bringing science, and it's a really difficult research area. In other words, there will be a lot of 100-year-old elderly people with dementia, and how will we be able to support them? And once you are over 90 of age, you are supposed to be with a disease. And with that, what is required is not to treat the disease but establish a new indicator. For us, it is ikigai, and our challenge is how we can support people's ikigai.
I announced this back in 2005. Back in 2005, I established CRO for the first time in Japan. We started as a group that can engage in drug development at any time. And in the same year, we came up with this concept of Pharmaceutical Value Creator by connecting all value chain elements. Today, we are still implementing our business based on this PVC model. And already, back at the time, we established the concept of a Healthcare Value Creator for this third stage to provide services with the aim of contributing to the preventative treatment of diseases and maintenance and improvement of people's healthy lives. This is exactly something that has led to the idea of healthcare revolution.
Now our reaction to the healthcare system. We aim to create new businesses as personal healthcare creator, keeping social impacts in mind. What is the impact as a personal health creator is a perspective of placing individual in the center and helping them live out their lives. Therefore, in order to provide a disease treatment from the supply side rather than the idea of providing drugs, we are thinking how we can provide individualized support. In this sense, we are engaging in various projects together with local governments and people. Creating new Healthcare business that contains not only treatments but also prevention and healthcare maintenance and promotion surely requires a model that fully uses digital transformation and IT and digital tools.
What is behind this is, as I mentioned earlier, reaction to the unsustainable increasing healthcare costs, changes in the social environment surrounding healthcare, and what is there beyond the bundling of healthcare and elderly care in the 100-year life. Here, needless to say, another indicator or ikigai needs to be introduced. And in terms of technology, it should be digital technology. And also, we have genomics, new biomarkers and others coming up. Using those items, we aim to transform the social system in an unconventional manner in some sense.
I'd like to introduce 2 of such. SelCheck is a business model that targets cervical cancer, which is a hot topic in Japan. On an annual basis, 7,000 people are newly diagnosed and approximately 2,500 people die. The morbidity of a woman in the 20s and 30s has been going up. And indeed, in those age brackets, the morbidity is highest in cervical cancer among all types of cancers. 99% of the cause is said to be human papillomavirus. However, as you are aware, vaccines are not used, and they don't come for screening. For this issue, we have established this business model where we mail this at-home HPV testing, SelCheck, to those who have not gone through cervical cancer screening and provide a continuous support for those with positive results to go to see a gynecologist. This model has already been demonstrated in the biomarker LFABP developed by us for CKD or chronic kidney disease. Now we have one for cervical cancer and LFABP for CKD. And for going forward, we are going to look at stress, heat stroke, sleep disorder and breast cancer, targeting those who have not gone through screening at medical institutions, identify those at high risk and guide them to hospitals in our platform. We continuously support them even after, and this is that business model. This is part of the proof-of-concept of future medical system that won't require patients to go through medical institution all the time, and we intend to make full use of accumulated individual data and pass it down to the next generation. This is the business model.
Next is harmo or electronic prescription record service, as brought up earlier. This is not just an electronic prescription record service but, indeed, PHR or personal health record. All health records are kept under control in the service. Concerned parties can download data from the cloud and have a look. This is surely connected with the mobile phones and can be sold in the future with the My Number system or the social security and the tax number system. The number of users is currently 350,000, and it is also adopted by more than 11,000 pharmacies all over Japan. The image of harmo is that it can be used from the time when you are born till you are grown up as your health records or even to the time when you start to receive elderly care. If the person providing elderly care for you has access to your harmo, for example, when you collapse and are taken to a hospital by ambulance, he or she can send a prescription information to the hospital, and they can react accordingly.
This is the image of harmo. And up to today, various proof-of-concept experiments have been initiated using these PHRs. In Shiga prefecture, they are used by 240 pharmacies with a penetration ratio of 40%, 8 medical institutions and about 100,000 users in Kobe City, Toyonaka City plus Yamanashi prefecture in the northern part of Kyushu will also be where proof-of-concept experiments will be conducted. Each area has its own challenges, and therefore, the proof-of-concept experiments address those challenges while expanding the harmo business. The harmo can improve the well-being of users. For example, it can tell you whether the children have been vaccinated or not. It can also reduce malpractice, be used in ER settings and, among others, make clinical trials more efficient, as I mentioned earlier. Indeed, the harmo can tell you what concomitant medication the clinical trial subject have used. In addition, the harmo can support clinical trial digitally where you can send the information digitally, and we receive such information digitally and thereby, can watch over you all the time in the total picture. This is what we are envisioning.
In the concept of using harmo as PHRs, we intend to keep watching over you even before you are born, incorporating the maternal and the child health handbook elements till you leave this world. It has benefits for pharmaceutical companies, the public administration, parents, family members and healthy people and the physicians, as described here. The basic idea is that it's not just a prescription record service, but with that, you can download data from the cloud, communicate information two-way and have a look at the data you are authorized. For example, family members who have moved from the countryside to Tokyo can check what drugs and treatments are provided for their father and mother staying in the country, basically, if you are authorized.
Another thing is to use harmo to improve well-being. People now talk a lot about well-being. And indeed, CMIC's corporate culture has been espousing well-being for a long time as part of W and 3C or well-being and challenge, change and communication. For well-being, we work with Keio University using this harmo and planning to conduct a proof-of-concept experiment to improve the well-being of users. Also, in order to promote work-life balance, we are developing our educational program for well-being.
I always conclude my presentation with this or our creed. CMIC Group will bring innovation to healthcare so that people, regardless of age, gender or race, can live their one and only lives according to their own will. We will continue to provide support, focusing not only on the binary of being healthy and being ill but also on people living their one and only lives.
Here's our challenge. As I mentioned earlier, it's not that healthcare revolution and CRO are not related at all. Rather, what CRO does is to standardize treatments, introduce most advanced treatments in a sense and attempt to reduce the overall cost. Therefore, through this healthcare revolution, we are aiming to create new businesses and address social issues by combining our own know-how and something new.
Thank you for your kind attention.
[Statements in English on this transcript were spoken by an interpreter present on the live call.]