Photo/Illutration Kobayashi Pharmaceutical Co.’s Benikoji Coleste Help, a supplement containing the benikoji ingredient (Provided by the company)

Kobayashi Pharmaceutical Co. on Aug. 8 announced that it will begin compensating people who have suffered health problems in connection with its “benikoji” supplements starting from Aug. 19.

The Osaka drug maker also said it will withdraw from the benikoji business, including the production of raw materials.

The company said if a reasonable causal relationship is found between the intake of the supplements and symptoms such as kidney-related diseases, it will compensate patients for medical and transportation expenses.

Kobayashi Pharmaceutical will also compensate for mental anguish, lost work time and lost earnings due to residual disability.

The company on Aug. 8 held a news conference for the first time in about four months since it announced the health hazard in late March.

Akihiro Kobayashi, who is a member of the founding family, resigned as president on Aug. 8, as previously announced, and Satoshi Yamane, senior executive director, replaced him.

Both Kobayashi and Yamane attended the news conference.

A report published by lawyers in late July pointed out that the company lacked safety awareness as a company dealing with health food products.

 “The management team was so focused on investigating the cause of the problem that we were unable to use our imagination to understand who would suffer the consequences of what was happening in front of our eyes and how,” Yamane said. 

In the company’s interim financial results for April-June 2024, which were released on Aug. 8, Kobayashi Pharmaceutical disclosed that compensation costs for product recalls and other things have totaled more than 8 billion yen ($54.7 million) at this time.

In the company’s January-March financial results, which was released in May, the company posted an extraordinary loss of 3.862 billion yen, mainly as product recall costs.

In the latest financial results, about 4.1 billion yen has been added to that amount.

The company also released its full-year forecast for the fiscal year ending Dec. 31, 2024.

According to the forecast, net sales are down 2.6 percent from the previous year to 169 billion yen and net income down 40.5 percent to 12.1 billion yen.

In May, the company withdrew the forecast, citing a difficulty in assessing the impact of the scandal.

The report compiled by an investigative committee consisting of lawyers listed a number of crisis management problems and questioned Kobayashi's leadership.

Yamane said, “The leadership in crisis management was a failure. This has also damaged the trust of the employees in the company.”

Yamane said he would work on fundamental reform of the management system.

But the vow lacks persuasiveness, as Kobayashi remains on the board of directors.

Furthermore, Kazumasa Kobayashi, a member of the founding family who resigned from the chairman's position due to the scandal, has been appointed as a special advisor with a monthly salary of 2 million yen.

At the news conference, Akihiro Kobayashi again apologized for the health scandal. He stated, “The basic premise of our company’s future is to offer complete compensation for the benikoji business to the last possible moment.”

For that, he said, “As a member of the founding family and president at the time of the incident, it is my mission to take responsibility and follow through on the compensation until the end.”

(This article was combined with reports written by Nanami Watanabe, Satoshi Seii, Ryuichiro Fukuoka and Koji Nishimura.)

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