Sustainable Procurement in Cooperation with Suppliers

Basic Policy

The Otsuka group is a signatory to the 2016 United Nations Global Compact (UNGC),and considers the compact’s positions on human rights, labor, the environment, and anti-corruption to be universal values. Our procurement is guided by the Otsuka Group Procurement Policy, which sets out the direction for consistently upholding the UNGC’s values, maintaining sustainable procurement practices in accordance with our corporate philosophy, “Otsuka-people creating new products for better health worldwide,” and improving corporate value while making a contribution to society.
To promote sustainable procurement, we established the Otsuka Group Procurement Policy across the Group and the Otsuka Group Sustainable Procurement Guidelines in September 2020, which we expect our suppliers to follow. These guidelines are formed from six items: Quality, Safety, and Stable Supply; Human Rights and Labor Standards; Environment; Anti-Corruption; Intellectual Property and Information Security; Business and Development Proposals; throughout the supply chain involved in procurement.

Otsuka Group Procurement Policy

The Otsuka group of companies, in accordance with our corporate vision, “Otsuka-people creating new products for better health worldwide”, and international norms, conducts procurement activities in a responsible way. Otsuka delivers innovative, safe, secure, and high-quality products in order to contribute to the construction and maintenance of a sustainable society, as well as to the health of people around the world.

  1. Relationships with suppliers
    As a collaborator with many suppliers, the Otsuka group aims to build good relationships for mutual sustainable development through shared understanding, based on a fair exchange of appropriate information and opinions.
  2. Supplier selection
    The Otsuka group selects suppliers in a fair, and transparent manner based on comprehensive assessments of supplier quality, costs, quantity, delivery terms, compliance with laws and regulations, promotion of environment preservation, etc..
  3. Responsibilities toward society
    For the realization of sustainable society, the Otsuka group strives to maintain procurement activities that reflect consideration for human rights, labor, the environment, and non-tolerance of corruption.
  4. Compliance
    The Otsuka group of companies observes all applicable laws and rules, and all Otsuka employees and supplier employees must act at all times with the highest level of ethics, consistent with social norms.

Otsuka Holdings Co., Ltd.
September, 2020

Promotion System

The Otsuka Sustainable Procurement Task Force, which is supervised by Otsuka Holdings’ directors and comprises Otsuka Holdings and eight group companies,* was formed in 2020. The task force meets once every two months to share sustainable procurement issues views on challenges, exchange information, and engaged in various initiatives to promote sustainable procurement internally and externally.

*Otsuka Pharmaceutical, Otsuka Pharmaceutical Factory, Taiho Pharmaceutical, Otsuka Chemical, Otsuka Foods, Otsuka Packaging Industries, Otsuka Techno, and EN Otsuka Pharmaceutical.


Embedding Sustainable Procurement through Training

We provide sustainable procurement-related training that takes into consideration human rights, the environment, and other issues, in order to further embed the Otsuka Group Procurement Policy and Otsuka Group Sustainable Procurement Guidelines throughout the group. Moreover, specific task forces work to improve the skills of procurement staff, providing them with opportunities to learn about sustainable procurement issues and other topics.

Implementation of Briefings on Sustainable Procurement Practices

We hold briefings for suppliers on sustainable procurement practices. Attendees learn about the Otsuka Group Procurement Policy and the Otsuka Group Sustainable Procurement Guidelines, and our expectations regarding compliance. These events are also opportunities for all parties to stay up-to-date on human rights and environmental issues and hear about examples of the group’s initiatives in action. Suppliers that agree to uphold our policies sign a pledge affirming their intention to cooperate in achieving sustainable procurement as business partners.

Implementation of Self-Assessment Questionnaire (SAQ) on Sustainable Procurement

Suppliers that sign the pledge conduct a self-assessment, which consists of the common SAQ published by Global Compact Network Japan, and the Human Rights SAQ and Environmental SAQ that we have developed taking into account characteristics of the Otsuka group business activities. Based on the results, we then conduct interviews with suppliers. Seven companies were interviewed in fiscal 2021, with the interviews conducted remotely as a pandemic measure. The sharing of examples of sustainable procurement practices are opportunities to learn from successful case studies, and cooperating to address specific concerns ensures that we and our suppliers can make tangible progress toward sustainable procurement.

Environment Self-Assessment (Environment SAQ) Implementation Status

The Otsuka group administers the Otsuka Group Environment Self-Assessment Questionnaire (SAQ) in conjunction with the common Global Compact Network Japan SAQ based on a recognition of the importance of building better communication with suppliers and other business partners and working together to reduce environmental burden throughout the supply chain. We are increasing opportunities for dialog with suppliers and striving to further improve our efforts to resolve issues caused by climate change.

Human Rights Self-Assessment (Human Rights SAQ) Implementation Status

We formulated the Otsuka Group Human Rights Policy in 2021, and based on a human rights risk assessment conducted at Otsuka Holdings and the seven main operating companies, we identified the prominent human rights issues in the Otsuka group and created the Otsuka Group Human Rights Self-Assessment Questionnaire (SAQ). We asked the same companies that filled out the Global Compact Network Japan SAQ to cooperate with our SAQ to identify, mitigate, and prevent adverse effects on human rights by reviewing the results and specifying risks.

Naoyuki Miyashita
Section Leader, Purchasing Department
Otsuka Pharmaceutical Co., Ltd.

Activities of the Otsuka Group Sustainable Procurement Task Force

The Otsuka Group Sustainable Procurement Task Force devises ways to effectively communicate with suppliers through discussions with members. In addition to briefings and SAQs, direct communication through interviews allows us to gain a deeper understanding of the approach of and issues facing each supplier, providing us with the opportunity to learn best practices. We are making steady progress in addressing supply chain issues and will continue promoting sustainable procurement throughout the Otsuka group.

Establishment of the Group Meeting on Sustainable Procurement

Group meeting on sustainable procurement:
Attendees include directors, executive officers and staff members from Otsuka Holdings, Otsuka Pharmaceutical, Otsuka Pharmaceutical Factory, Taiho Pharmaceutical, Otsuka Chemical, and Otsuka Foods who are in charge of purchasing, sustainability promotion, and IT.

Group meetings on sustainable procurement were launched in 2022 under top management for sustainable procurement at Otsuka Holdings aimed at promoting activities as well as stable procurement, related to the four areas defined by the United Nations Global Compact: human rights, labor, the environment, and anticorruption.

Robust Global Network for Stable Supply of Prescription Drugs

Otsuka Pharmaceutical established the Global Supply Chain Committee (GSCC) in 2017 to make decisions on important production and supply-related issues for anticancer drugs, orphan drugs, tuberculosis drugs and others to ensure a stable supply of pharmaceuticals in the global market. Otsuka Pharmaceutical and our overseas subsidiaries are cooperating to strengthen the supply chain. This includes the addition of manufacturing bases in 2022 to bolster the supply chain in the global market for core products.

Joint Business Partner Audits by Pharmaceutical Companies

In the Otsuka group, four pharmaceutical companies* conduct joint business partner audits for shared suppliers of raw materials. We began these audits in 2016, applying proprietary methodologies that include an auditor skills training program.

Yasumasa Omote
Director, Quality Assurance Department, Headquarters for Product Safety and Product Assurance
Otsuka Pharmaceutical Co., Ltd.

Joint Business Partner Audits

Through joint efforts by the Otsuka group’s pharmaceutical-related companies, we standardized business partner audits and improved the skills of our auditors. This helps us respond to misconduct in the area of quality, which leads to more trusting relationships with raw material suppliers.