Welcia and Tsuruha are fast-tracking their planned merger to forge Asia’s pharmacy retail giant, as activist investors and competitive pressures reshape the sector.
Japan’s largest drugstore chains are finalizing negotiations to speed up their integration by about two years, with Tsuruha now set to make Welcia a wholly owned subsidiary by December, Nikkei reported. The expedited timeline follows their initial February 2024 announcement that had targeted 2027 for completion.
Retail conglomerate Aeon, which holds a majority stake in Welcia, will make Tsuruha a consolidated subsidiary by year-end 2025. The accelerated integration comes amid growing global investor interest in Japan’s drugstore sector, with activist fund Oasis Management’s shareholder proposals likely prompting the strategic shift.
Despite Japan’s shrinking population posing market challenges, investors remain bullish on pharmacy retailers as potential beneficiaries of the country’s aging demographics and healthcare cost-containment efforts. Over-the-counter medications are increasingly viewed as partial solutions to Japan’s healthcare spending concerns.
The combined entity aims to generate annual sales of ¥3 trillion ($21.1 billion) and operating profit of ¥210 billion by fiscal year 2032. The ambitious targets would position the merged company on par with Hong Kong-based A.S. Watson, currently among Asia’s largest drugstore operators.
Tsuruha’s president previously announced the companies’ goal of establishing Asia’s preeminent drugstore chain, signaling intentions to expand beyond Japan’s competitive domestic market into broader Asian territories.
