Core Principles
The Otsuka group, as a total healthcare company, is committed to providing a stable supply of safe and reliable products that are trusted by all. In our group's procurement activities, we consider human rights, working conditions, anti-corruption, and the environment, in addition to quality, safety, and stable supply. We aim to implement sustainable procurement with our business partners, and strive to build a sustainable supply chain and improve the corporate value of both parties.
The Otsuka Group's Materiality and Related SDGs
- Create More Sustainable Future
With Business Partners
Social Issues
- Destabilization such as pandemics, geopolitical risks of raw material procurement and product supply due to supply chain disruption
- Building a sustainable supply chain
Related SDGs
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Sustainable Procurements With Our Suppliers
In our procurement activities, we established the Otsuka Group Procurement Policy and Otsuka Group Sustainable Procurement Guidelines in September 2020 to enhance our relationship with suppliers. These guidelines have been communicated to all our suppliers. We are committed to ethical and sustainable procurement activities, in addition to quality, safety, and stable supply.
To ensure a stable product supply, we have conducted due diligence on new suppliers and risk assessments of key raw materials. We have also implemented risk countermeasures for raw material procurement, such as identifying potential risks and sourcing from multiple suppliers. While some of our overseas and domestic operating companies already evaluate new suppliers based on human rights, labor conditions, anti-corruption measures, and environmental impact, expanding this evaluation to all group companies remains a challenge for the future.
Otsuka Group Procurement Policy
Download our procurement policy here.
Otsuka Group Sustainable Procurement Guidelines
Download our procurement guidelines here.
Promotion System
A sustainable procurement project was launched in 2022, which was led by the director in charge of sustainability at Otsuka Holdings, and its progress and issues are shared every quarter. This project promotes activities with two pillars: “Stable Procurement,” aiming to build a solid procurement system to deliver high-quality products, and “Responsible Procurement,” aiming for ethical and sustainable procurement activities.
Promotion Structure of the Sustainable Procurement Project
Approach
Stable Procurement
To enhance stable procurement further, we formed a cross-functional working group in 2022. Now we are working on building a procurement information management system as initiatives to manage and visualize information, which was previously taken place by each company. In 2023, we clarified key items in terms of their urgency and priority. In 2024, we would implement a system that aligns with the process of data-sharing that we have explained to our suppliers. We also plan to establish guidelines for risk management during emergencies and normal times. That is how we aim to standardize the whole process from risk assessment, analysis, and response.
Responsible Procurement
In parallel with efforts for stable procurement, we have formed a cross-group working group to promote ethical and responsible procurement activities. The working group is composed of procurement personnel from each operating company, and in 2023, the working group reviewed the Otsuka Group Procurement Policy, Otsuka Group Sustainable Procurement Guidelines, and assessment tools. The working group also deepened their knowledge of the four areas (human rights, labor, environment, and anti-corruption) defined by the United Nations Global Compact and conducted training to establish good relationships with suppliers. Going forward, the working group plans to continue training in 2024, with the aim of promoting responsible procurement.
Expanding Supplier Assessments
The Otsuka group conducts supplier assessments using the CSR Procurement Self-Assessment Questionnaire (SAQs) prepared by Global Compact Network Japan (GCNJ) to assess the suppliers' environmental, social, and ethical performance. We have implemented SAQs for 597 suppliers in Japan and 56 overseas, and based on the results we have conducted interviews for 125 suppliers to confirm that there are no significant risks. Furthermore, from 2024, we have expanded the assessment by utilizing our own SAQs, which have evolved from the conventional GCNJ SAQs, and the sustainable procurement platform EcoVadis (https://ecovadis.com).
We would keep track of our KPIs related to our sustainable procurement initiatives, such as the supplier assessment participation rate, the response rate to risks identified in the assessment, and the implementation rate of communication with suppliers.
The Otsuka group will work with suppliers to achieve a sustainable society throughout the supply chain, under the sustainable procurement project. To this end, we will rebuild our overall strategy, including the development of guidelines, the expansion of supplier briefing and assessments, and the enhancement of internal education to promote sustainable procurement.
Sustainable Procurement Activity Results
| Item | Target | Result | Initiatives |
|---|---|---|---|
| Procurement Personnel Training | Responsible Procurement Working Group 12 procurement personnel from 9 group companies |
Training time: total 6 days About 30 hours |
We implemented training to deepen knowledge in four areas defined in UNGC (human rights, labor, environment, and anti-corruption) and build constructive relations with suppliers. |
| On-demand briefing for suppliers | Number of companies (Japan): 587 | Number of companies: 583 (Implementation rate: 99%) |
The Otsuka Group Procurement Policy, Otsuka Group Sustainable Procurement Guidelines, Otsuka Group Environmental Vision 2050, and Guidelines on Respecting Human Rights in Responsible Supply Chain have been explained to the suppliers. |
| Consent to policy and guidelines | Number of companies (Japan): 587 Number of companies (overseas): 66 |
Number of companies (Japan): 583 (Acquisition rate: 99%) Number of companies (overseas): 51 (Acquisition rate: 77%) |
We have obtained an understanding of the Otsuka Group Procurement Policy and Otsuka Group Sustainable Procurement Guideline and consent from suppliers who agree to collaborate on the promotion of sustainable procurement. |
| Supplier Assessments | Number of companies (Japan): 612 Number of companies (overseas)：66 |
Number of companies (Japan): 597 (Acquisition rate: 98%) Number of companies (overseas): 56 (Acquisition rate: 85%) |
The assessments are conducted using the GCNJ's SAQs and Otsuka Group's own Human Rights SAQs and Environmental SAQs. |
| Supplier Interviews | Number of companies (Japan): 125 | Telephone interviews: 112 Web interviews: 13 |
We conducted interviews to ascertain the actual state of activities based on the results of the supplier assessment. |
Message from Pharmavite
Ray Gosselin
EVP, Chief Operations Officer
Pharmavite, LLC
As a leader in the health and wellness industry with a commitment to responsibly produce the highest-quality products for our consumers, it is essential to Pharmavite that we continuously improve our efforts in sustainability. In my role as Chief Operations Officer at Pharmavite, I am charged with ensuring that our suppliers share our commitment to sustainability and understand the urgency of the issue.
The first step in our sustainability agenda is to gain transparency with our suppliers and their suppliers' sustainability performance, and taking proactive steps to do so reflects the important values of our organization: Do The Right Thing, Care Deeply, and Do Something. To that end, Pharmavite conducts individual sustainability performance assessments of our supply chain partners using EcoVadis, a global ESG rating company based on international standards. This assessment is a key factor for Pharmavite sourcing and supplier review as we believe this process is critical to our supply chain sustainability management.
We believe that this strategic initiative with our supply chain partners will enhance our mutual corporate values and pave the way for a more sustainable future.
Robust Supply Chain Network for the 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.