Japan’s healthcare market, despite being the world’s third largest, still operates primarily on pen and paper. Kakehashi, a health-tech company, is aiming to expedite the digitalisation process for pharmacies, from patient care to administrative operations.

The untapped opportunity and vision caught the attention of Goldman Sachs Alternatives, part of Goldman Sachs Asset Management, which led a USD 97m Series D round for Kakehashi earlier this month. The transaction featured a mix of primary and secondary shares, and debt.

Other participants included JIC Venture Growth Investments, Japan Post Investment and Mitsubishi UFJ Capital, as well as existing investors DNX Ventures, Dai-ichi Life Insurance, and Aozora Bank.

“The [pharmaceutical] industry itself is run by traditional semi-public or public entities with tools and business operations that are outdated and inefficient,” said Yu Itoki, a Tokyo-based managing director in growth and corporate equity at Goldman.

“Compared to other countries like China, US or Europe, and other developed countries, Japan appears to be significantly outdated, and we believe software or cloud-based platforms will help streamline operations.”

Kakehashi’s software-as-a-service (SaaS) application and flagship product, Musubi, is touted as providing a competitive edge. The cloud-based medication record and patient guidance tool helps streamline pharmacy operations and patient care by automating tasks like medicine record writing and providing personalised medication advice.

It also provides a customer relationship management (CRM) system for pharmacies, an automated prescription ordering system, and inventory management tools with artificial intelligence-enabled (AI) forecasting.

The new capital will be used for product expansion, to grow the team serving both existing and new businesses, and for M&A. In February, Kakehashi acquired 100% of Noah Medical System, a medical technology company that develops business systems for pharmacies, for JPY 3bn (USD 20m).

Coming consolidation

Kakehashi claims Musubi already serves over 20% of pharmacies in Japan and that its client base is likely to grow in parallel with the consolidation effect the industry is beginning to experience locally.

According to Itoki, the vast majority of Japan’s 60,000 pharmacies are mom-and-pop shops. He expects consolidation to follow the trend in the US, where the retail market has reached a duopoly – namely CVS and Walgreens – through a combination of strategic acquisitions, price wars, and aggressive competition.

“M&A roll-ups have been active in Japan where there is an increasing number of smaller drugstores or pharmacies being bought out by large chains. It is very natural for large drug chains to acquire small mom-and-pop shops to streamline their operational process,” he added.

PE appetite for Japan healthcare has never been stronger. Investment reached an all-time high of USD 3.2bn in 2024, but that has already been surpassed in 2025 with USD 3.5bn posted year-to-date, according to AVCJ Research.

A handful of pharmaceutical buyouts are largely responsible for this uptick. However, there have been a few sizeable pharmacy-related deals in recent years, such as Sogo Medical, Kirindo Holdings, and Sakura Pharmacy Group. The latter was recently exited by NSSK. Unison Capital, meanwhile, has a healthcare platform partly focused on pharmacy roll-ups.

It is also worth noting that the broader healthcare sector has seen more growth equity and buyout investments since 2023 than in the prior five years combined. This activity points to several broader trends identified by Itoki: the current size of Japan’s healthcare market, the anticipated increase in demand from an ageing population, and operational inefficiencies that might be addressed through initiatives around digitalisation.

“We think the catalyst for private equity deals in the market is fundamentally rooted in these issues, and we’re seeing a number of private equity firms backing healthcare companies,” Itoki added. “There is a lot of demand for productivity improvement in pharmacy operations and some of the companies require funds to provide support to increase competitiveness.”