Menicon : Integrated Report 2021

Menicon

Integrated Report

2021

Contact Us:

If you have any questions regarding this report, use the contact information provided on the right.

Menicon Co., Ltd. Finance & Investor Relations Dept.

Phone (+81)[e-mail]

Vision 2030

New Vision of "Miru" for the World

"Miru (=feel)" is about having fun and pleasure through the five

senses and being empathetic.

The Menicon Group continues to propose "Miru" that matches

various situations and life stages to realize a fulfilling and happy life.

In addition to the Vision Care Business centered on contact lenses

History	Top Message	Value Creation	Medium-term	Business	CFO Message	Corporate	Sustainability	Financial & Non-	General
Process	Management Plan	Strategies	Governance	financial Highlights	Information

Corporate Slogan

Contributing to society by providing superior

visual correction.

To End Users

As a pioneer company, to enhance customer satisfaction by offering superior technology that provides the joy of sight and the joy of living, and to become a company regarded by all customers as an enterprise they want to continue to use as long term end-users.

and Lens care products, we will boldly take on challenges

in the areas of healthcare (Medicine/Health) and

life care (Living/Culture/Environment).

Through corporate activities that care about the global social contribution and the environment, we will continue to maintain our importance worldwide.

To Our Employees

To heighten employee satisfaction by providing a rewarding work environment that permits self- actualization as a company respectful of individuals, and to be regarded by all employees as an enterprise where they want to continue working as family.

Our Mission to

Stakeholders

To Industry Participants

To boost satisfaction among outside researchers, clients, business partners, and other collaborators by contributing proactively to the growth of the industry as a corporate leader, and to be regarded by all other members of the industry as a partner with which they want to continue to do business in the future.

We will introduce new "Miru" to the world so that

everyone can feel happy and fulfilled.

To Society	To Our Shareholders
As a global citizen, to pay respect to	To increase shareholder satisfaction
all life, the environment, cultures,	through an unwavering spirit of legal
and history, and to increase the	compliance and robust corporate
satisfaction of all citizens, and to be	performance as a company respectful
eternally considered a "good neighbor"	of morality, and be regarded by all
by all.	shareholders as an enterprise they
	want to back as supporters in the future.

Management Principles

Values

Creation Originality Challenge

To take up the bold challenge of accomplishing what no one else has done before

by creating new values

from nothing.

MissionVision

The kind of enterprise	The dream that we want
we want to be	to achieve
To use our technology and human	To be number one,
resources developed through	a paramount enterprise
contact lenses to continue to	respected and loved
provide the world with products	by all stakeholders.
and services needed by society as
a creative specialist company.

Contents

History of Menicon's Value Creation, Providing Support for Sight

Top Message

Value Creation Process

Medium-term Management Plan

Business Strategies

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5

9

11

13

CFO Message	19
Corporate Governance	21
Sustainability	25
Financial & Non-financial Highlights	29
Investor & Stakeholder Relations	31
Corporate & Stock Information	32

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History of Menicon's Value Creation, Providing Support for Sight

History	Top Message	Value Creation	Medium-term	Business	CFO Message	Corporate	Sustainability	Financial & Non-	General
Process	Management Plan	Strategies	Governance	financial Highlights	Information

Our history has been one of constant efforts since foundation.

Going forward, we will continue to work hard to provide comfortable life to people.

Net Sales (¥ billion)

H i s t o r y o f M e n i c o n

1951	Menicon's founder Kyoichi Tanaka
developed Japan's first corneal contact lens

Tanaka, who was working at an optical shop, happened to hear about contact lenses from the wife of a U.S. Army officer. However, she did not show any actual contact lenses to him. Tanaka resolved to create a practical contact lens, and after much study and research, he succeeded. Since that time, at Menicon, we have continued our corporate activities by taking up the bold challenge of accomplishing what no one else has done before by creating new values from nothing.

Vision 2030 New Vision of "Miru" for the World

To help you realize more enriched days filled with smiles, the Menicon Group aims to contribute to the development of a sustainable society through corporate activities that care about the global social contribution and the environment.

We have set quantitative targets for the fiscal year ending March 2026 as a milestone to Vision 2030.

			140
			130
Quantitative Targets (FY2026/3)
			120
Consolidated	140 billion yen
net sales:
Operating	12%		110
profit ratio:
ROE:	10%		100
		2021
		70th anniversary of
		Menicon's founding	90

1997		2013	2018
Hard contact lens Menicon Z		Number of MELS Plan members	Three-month replacement hard
introduced to market		reached one million	contact lenses Four Seasons
			introduced to market

80

70

2001

2014

2020

60

MELS Plan member-only system launched

Circle lenses 2WEEK Menicon Rei

2008

introduced to market

Daily disposable circle lenses

1DAY FRUTTIE introduced to

50

Two-week replacement silicone hydrogel contact lenses

2016

market

2WEEK Menicon PremiO introduced to market

Daily disposable silicone

40

2011

hydrogel contact lenses

30

1DAY Menicon PremiO

Thin 1 mm package daily disposable

introduced to market

contact lenses Magic introduced to market

20

■ Contact lenses and other

■ MELS Plan

10

■ Group companies

* Consolidated net sales from FY2014/3

0

'76 3

'81

3

'86 3

'91

3

'96 3

'01

3

'06 3

'11

3

'16 3

'21

3

'26

3

/

/

/

/

/

/

/

/

/

/

/

(Projection)

	Evolving as a contact lens maker	Pursuing technological edge and quality		Placing eye safety first	Establishing Menicon brand globally
1967	1984	2002	2010	2012	2015	2016	2020

"Menicon" registered as a trademark Seki Factory established in Gifu	Technology development center Menicon
Prefecture as the main plant	Techno Station established in Gifu Prefecture

Japan	1995	2003
	The R&D Center established in Aichi	A subsidiary operating veterinary medical
	Prefecture	business founded in Aichi Prefecture
		[Meni-one Co., Ltd.]

Acquired shares of contact lens care product manufacturer in Aichi Prefecture

[Menicon Nect Co., Ltd.]

Acquired shares of contact lens retail outlet in Tokyo [W.I. System Co., Ltd.]

2015

Kakamigahara Factory established in Gifu Prefecture as a manufacturing plant for daily disposable contact lenses

Menicon newly listed in the First Section of the Tokyo Stock Exchange and the First Section of the Nagoya Stock Exchange

Acquired shares of contact lens retail outlet in Tokyo [Fuji contact Co., Ltd.]

Acquired shares of contact lens	Acquired shares of contact lens retail outlet
manufacturer in Aichi Prefecture	in Osaka Prefecture
[Alpha Corporation]	[Hamano Contact Co., Ltd.]

Acquired shares of contact lens retail outlet in Fukuoka Prefecture [AIP Co., Ltd.]

Overseas

3

1977

Menicon SAS founded in France [Menicon SAS]

1988

Menicon GmbH founded in Germany [Menicon GmbH]

1992

A lens care product plant established in France [Menicon Pharma SAS]

2001

Menicon España S.L. founded in Spain [Menicon Iberia S.L.]

2001

Menicon America, Inc. founded in the U.S.A. [Menicon America, Inc.]

2005

Menicon Singapore Sales Pte. Ltd. founded in Singapore

[Menicon Singapore Sales Pte. Ltd.]

2006

Acquired shares of contact lens manufacturer in Netherlands [Menicon B.V.]

Menicon Singapore Pte. Ltd. founded in Singapore [Menicon Singapore Pte. Ltd.]

2009	2013	2019
Acquired shares of contact	Acquired shares of sales distributor in	Acquired shares of contact lens
lens manufacturer in UK	Australia	manufacturer in Italy
[Menicon Limited]	[Menicon Australia Pty Ltd]	[SOLEKO S.p.A.]

2014

Menicon Korea Co., Ltd. founded in Korea [Menicon Korea Co., Ltd.]

2020

Acquired additional shares of contact lens manufacturer in China and made it a wholly owned subsidiary [Wenzhou FocuSee Vision Care Technologies Co., Ltd.]

2021

Acquired shares of import/export company having sales channels primarily in China [Itabashi Trading Co., Ltd.]

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Top Message

To Our Stakeholders

History	Top Message	Value Creation	Medium-term	Business	CFO Message	Corporate	Sustainability	Financial & Non-	General
Process	Management Plan	Strategies	Governance	financial Highlights	Information

We are grateful for the 70 years in business. Menicon aims to achieve further growth and evolution by introducing new

"Miru" to the world based on its contact lens business.

Director

President and CEO

Hidenari Tanaka

User First" experience, and "SMART TOUCH" packaging that allows users to remove and put contact lenses on hygienically and easily without touching their inner surface.

We stand close to our customers and work meticulously to respond to their needs, all the while leading the generation with revolutionary ideas thinking beyond conventional needs and common sense. These two orientations are evident in Menicon's other strength―on both ends of its integrated system that governs the functions of research and development to manufacturing and sales. The sales function can draw various needs directly from many end users, while the research and development function can boldly take on challenges in creating new values in view of the coming era. We believe that Menicon's raison d'etre is in our approach of competitive advantages in both the upstream and downstream of the

From example, jumping from a height is an act that involves taking risk. The outcome is, you may hurt yourself badly, or you may get away with a minor injury. Or, you might be able to land softly and remain unharmed, or you may be hit somewhere vital beyond recovery. In any case, you wouldn't know until you jump, and there are infinite possibilities as to the outcome. So a "risk," which contains the possibility of various consequences, is essentially the same as "diversity." And if the results are already determined, there is nothing we can do or work upon, and there is no room for a "chance." However, for risks whose consequences are unknown, we can work upon them to obtain desirable results. It isn't until we assume the diversity called risk that we see a "chance" or an "opportunity." So, risk is a chance, and the contrasting concepts of "risk" and "opportunity" are, in fact, two faces of the same coin. We

We stand close to our end users and innovate our business with creativity ― Menicon's DNA that supported its 70 years

direct shops and engineers in the production sites, sales representatives negotiating with business partners, corporate divisions supporting the company from within, to management

seamless commercial distribution, which generates profit for all stakeholders and eventually leads to contributing to society.

should have the spirit of "generating the changes of the future by ourselves," and face the "risks and opportunities" head-on.

of history

Menicon began in 1951 when the founding chairman-to-be Kyoichi Tanaka, at the tender age of 20, first heard of contact lenses from the wife of a U.S. Army officer. With tremendous curiosity, Tanaka developed Japan's first corneal contact lens from scratch, using his own body as guinea pig, and since his success in achieving practical use, Menicon celebrated its 70th anniversary this year. First and foremost, we greatly appreciate all stakeholders who have supported the development of our company.

Throughout this long journey, Menicon has always maintained its attitude of "End User First." The essence is the value to give top priority to the interest of our customers. If you take contact lenses, for example, our ultimate goal is to provide end users with the advantage of "gaining proper vision safely and comfortably." And it is precisely for the purpose of achieving this goal that all of us―from the sales clerks at our

taking command of the company―exercise wisdom and work up a sweat.

The satisfaction and happiness of each and every customer achieved through these efforts will transform into profit, sense of accomplishment and motivation and flow not only within our company but also among our partner stores and suppliers, shareholders and other stakeholders. In other words, the interest of all our stakeholders is originated from a single point of "realizing the interest of end users," and the satisfaction and happiness of our customers become the source of value created by Menicon.

Meanwhile, Menicon has a history of originality, creating products and services that did not exist in the world. Our groundbreaking ideas have defied the conceptions of contact lenses, including Japan's first corneal contact lens which became the origin of our business, the flat-rate contact lens subscription system MELS Plan offering the ultimate "End

Basic perspective on "risks and opportunities," focusing on diversity inherent in "risks" and capturing them as "opportunities" for involvement

When we turn our eyes to the current surrounding environment, we expect a population decrease in Japan due to low birthrate and aging population, while increases in the global population and the number of people having myopia are notable. As such, we anticipate demands for the suppression of myopia progress in addition to conventional vision correction contact lenses. When considering these "risks and opportunities" in front of us, I think that we must first go back to the original meaning of these words. The word "risk" is often used in association with the nuance of "danger," but in essence, it means that we "do not know what the consequences are." In other words, we can say that "the results are not predetermined."

The launch of Vision 2030, the medium- term management plan to accelerate our challenges into new domains from the starting point of various "Miru"

The fiscal year ended March 2021 was the final fiscal year of "Vision 2020," the medium-term management plan defining "Menicon's ideal state in 2020," and we put on a final spurt in the strategy of pursuing "growth of MELS Plan," "growth of overseas businesses," and "growth of new businesses." Despite the difficult situations amidst the novel coronavirus disease (COVID-19) pandemic, negative impacts to our business performance was minimized thanks to the stable sales of the MELS Plan. We were also able to improve our profitability as a result of group-wide efforts to improve the profit structure. I feel that it is an accomplishment to have been able to achieve the figures close to planned targets in these adverse conditions.

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Top Message

To Our Stakeholders

History	Top Message	Value Creation	Medium-term	Business	CFO Message	Corporate	Sustainability	Financial & Non-	General
Process	Management Plan	Strategies	Governance	financial Highlights	Information

And starting this fiscal year, we launched our new medium- term management plan "Vision 2030." Under this plan, we will further expand the vision care domain, and in addition, enhance the healthcare and life care business domain which includes pet life, health/food business, and environmental business.

The slogan of this plan, "New Vision of 'Miru' for the World," was formulated in hope to materialize and provide happiness and fulfillment to everyone by feeling the emotions of pleasure and joy and being empathetic through the five senses of seeing, hearing, touching, tasting, and smelling. This "Miru" implies a positive nuance of trying something, not merely an action of "doing." To try something you didn't know about, something new. To gently encourage such people through unprecedented products and services, and to create a springboard for them to step out into the unknown world. This is also what we are aiming for.

We will not settle for the stable recurring revenue model, and will pursue further growth and diversity on a global scale and in new business domains

Launched in 2001, MELS Plan is a forerunner among the recently popular subscription-type services, and is based on a "sanpo yoshi (triple win)" business model which benefits manufacturers, customers, and stores. This service materializes our "End User First" policy of giving top priority to the interest of our customers, and now boasts a membership base of 1.34 million users that supports the growth of the Company as a stable revenue base in the recent years.

well as provide high value-added products that can differentiate ourselves on an on-going basis through initiatives such as development of new materials. Also, we will enhance our production capabilities, sales force, and partnerships in the Chinese market and expand the network of business partners in other areas in order to increase overseas sales. Moreover, orthokeratology, said to be effective in suppressing the progress of myopia, is becoming a globally emerging market. Although Menicon is already supplying products in the Japanese, Chinese, and EU markets, the plan is to expand sales even further.

In addition, we will develop new businesses to materialize the five senses under the keyword of "Miru" as mentioned above, and undertake research and development of products and services to enhance the quality of life of end users. I also mentioned earlier that "diversity is an opportunity." In fact, life has overcome countless global crisis and survived to date thanks to diversity. To survive in business, we must have the mindset of steering away from business-as-usual, opening up new domains, and achieving diversity.

True, out-of-the-box business solutions based on flexible thinking approaches, with our eyes on the intrinsic purposes of SDGs

I believe that every business activity of Menicon is contributing towards achieving the SDGs by pursuing "End User First." What is required here is the ability to identify the true essence. Contact lenses are made of plastic which poses burden on the environment. This is because we have no ideal material at this

environmental loads in all aspects of our business activities. Also, we started using Gifu Japanese umbrellas made with natural materials to be used at our head office, aiming to reduce plastic and also to promote the traditional crafts industry. Unlike vinyl umbrellas that people easily trash when broken, these Japanese umbrellas that craftsmen painstakingly made would surely make people hesitate to throw them away even if they are bruised. To teach the importance of mending and using things for many years, I personally wish to promote activities to re-communicate the Japanese traditional value of "mottainai." Meanwhile, we opened an open selection-type leader development program Menicon Business College for our employees. We are working to create a workplace where each employee, regardless of age or sex, can enjoy job satisfaction and participate actively, and also to promote health management. Furthermore, we sponsor Menicon Cup youth football match and support young classical music performers. To maintain these corporate activities, it is essential to strengthen our governance and enforce our risk management and compliance. Based on this perspective, Menicon, in 2010 prior to its listing, was mandated to have majority outside directors on the board, and transferred to a company with three committees (currently, company with a nomination committee, etc.) to separate the business execution and supervisory functions.

Lastly, to our stakeholders

The Company has a clear definition of stakeholders and

manifests its commitment to each stakeholder as "Our Mission to Stakeholders." We pay our respect to all stakeholders―end users to whom we reach out in order to be regarded as an enterprise whose products and services they want to continue using; industry participants (partners); our employees (family); our shareholders (supporters); and society (good neighbor) encompassing the global environment, all lives, and culture. Menicon aims to become a company that is respected and loved by society.

While the difficult situations of the COVID-19 pandemic persist, we will continue to focus on taking stringent measures to prevent infection and developing the environment to continue our business, and work together with you to overcome this crisis. I sincerely wish the continued good health of all our stakeholders and would like to ask for your continued support.

However, already 20 years have passed since the birth of this MELS Plan. In the ever-changing society and world, no business model could last forever. We mustn't rely too heavily on this recurring revenue model, and must strive to develop more attractive products and services and to create businesses that will become the new pillars of revenue.

So the growth scenario for the time being is to expand sales mainly of 1DAY type products in the overseas market while reinforcing production capabilities of our domestic plants, as

point to replace plastic, and plastic is used as "necessary evil." In fact, it is possible that the alternative materials will have greater impacts on the environment. A simplistic mindset such as "just reduce plastic" will be detrimental to truly resolving the issues towards the original objectives of the SDGs.

Meanwhile, environmental conservation is certainly a top priority theme for Menicon as a company that uses plastic. Therefore, we are promoting the research and development of environmentally friendly products and the reduction of

For other details on IR information, Menicon's products and services, new businesses, and

cultural promotion activities, please tune into MeniconRadio, an internet radio program in which

President Tanaka himself talks about various topics from various angles (in Japanese only).

https://kotonoha.life/contents/menicon/

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