Second Quarter of FY2014 (March 2015) Earnings Results Takashi Saito, Executive Officer

Second Quarter of FY2014
(March 2015)
Earnings Results
Takashi Saito, Executive Officer
Taisho Pharmaceutical Holdings
October 31, 2014
Results for the 2nd Quarter of FY2014
(¥ bn)
FY2013
2Q(4-9)
Net sales
FY2014
2Q(4-9)
YOY change
Vs.
previous
E*
144.6
141.8
-2.8
-1.9%
-5.2
Self-Medication
91.4
88.1
-3.4
-3.7%
-5.0
Rx Pharmaceutical
53.1
53.7
+0.6
+1.1%
-0.2
Operating income
21.5
16.2
-5.3
-24.5%
+1.2
Ordinary income
25.6
19.6
-6.0
-23.4%
+0.6
Net income
16.5
12.6
-3.9
-23.8%
+0.6
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
1
Overview of FY2014 2nd Quarter Results (1)
• Self-Medication Operation Group (Taisho, Japan)
– Results did not meet initial forecasts mainly due to the impact of
the consumption tax hike being greater than anticipated, and to
unsettled summer weather in Jul.- Sept.
• Self-Medication Operation Group (Overseas)
– Overall, performed largely as planned as a whole
– Sales up year on year due to contribution from brand acquisition
(Flanax)
– Results did not meet initial forecasts due to the sluggish
consumption caused by the political instability in Thailand
<For reference: Market conditions>
– Domestic OTC drugs market
FY2014 2Q (Apr.- Sept.): contracted 3.9% YOY
(Apr.- Jun.: contracted 6.4% YOY, Jul.- Sept.: contracted 1.5% YOY)
(Taisho’s estimates based on INTAGE SDI/SRI data on a value basis)
2
2Q of FY2014: Sales of Leading Brands
(Self-Medication Operation Group in Japan)
(¥ bn)
FY2014
2Q(4-9)
Lipovitan series
YOY change
Vs.
previous
E*
35.3
-2.3
-6.1%
-2.7
Pabron series
9.9
-0.4
-4.1%
-0.3
RiUP series
6.7
-0.3
-3.7%
-0.3
Livita series
1.9
-0.3
-12.7%
-0.4
GI drugs series
1.9
-0.1
-4.8%
-0.2
NARON series
1.9
-0.2
-8.4%
-0.1
Colac series
1.6
-0.1
-7.4%
-0.2
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
3
Overview of FY2014 2nd Quarter Results (2)
• Overseas Business
(¥ bn)
Main components of net sales
FY2014
2Q(4-9)
YOY change
Vs.
previous E*
13.5
+0.5
+3.5%
-0.2
13.5
+0.5
+3.5%
-0.2
Overseas
energy drinks
4.7
-0
-0.7%
-0.1
Overseas OTC drugs
8.3
+0.5
+6.0%
-0.1
Asia
6.9
+0.2
+3.5%
-0.3
Other
1.4
+0.2
+20.6%
+0.2
Overall Overseas Business
Self-Medication
overseas business
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
4
Overview of FY2014 2nd Quarter Results (3)
• Prescription Pharmaceutical Operation Group
– Sales trend in major brands (YOY change)
• Infectious diseases field:
– ZOSYN (+3.1%): Continued to contribute to expanded indications
– Clarith (-18.6%): Sales were lower due mainly to NHI drug price
revisions and the contraction of the antibacterial agent market
• Inflammatory / immunologic diseases field:
– Edirol (+27.1%): Penetrated market as a base-drug osteoporosis
agent
– Bonviva: Launched in August 2013 and is being steadily adopted
by an increasing number of medical facilities
• Metabolic diseases field:
– Lusefi: Launched in May 2014 and increased provision of
information emphasizing its safety
<For reference: Market conditions>
The prescription pharmaceutical market contracted by 1.3% YOY
The market for antibacterial agents –Taisho’s core market–
shranked by 9.2% overall (Oral: down 12.0%, Injection: down 6.0%)
(©2014 IMS Health. All rights reserved.
Source: IMS JPM 2013 and 2014 (Apr.-Sept.), reprinted with permission)
5
Prescription Pharmaceutical:
Sales of Leading Products for 2Q of FY2014
(¥ bn)
FY2014
2Q(4-9)
Vs.
previous E*
YOY change
Infectious diseases field
ZOSYN
12.5
+0.4
+3.1%
-0.5
Clarith
5.5
-1.3
-18.6%
-0.5
OZEX
2.6
-0.5
-17.3%
-0.5
Inflammatory / immunologic diseases field
Edirol
7.6
+1.6
+27.1%
+0.5
Bonviva
1.5
+1.2
+488.1%
+0.3
Palux
3.5
-0.4
-11.0%
±0
Lusefi
2.4
+2.4
-
±0
Metabolic diseases field
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
E: Estimates *Comparison with forecast of July 31, 2014
6
Factors Affecting FY2014 2nd Quarter
Net Sales and Profits
(Year-on-Year change)
Net sales
Self-Medication
(down ¥2.8bn) (down ¥3.4bn)
Rx Pharmaceutical
(up ¥0.6bn)
Operating
Gross profit* down ¥2.0bn
income
(Gross margin* FY13 2Q: 62.7%  FY14 2Q: 62.6%)
(down ¥5.3bn)
SG&A expenses
up ¥3.3bn
(Main factors behind changes)
・R&D expenses
down ¥0.6bn
・Advertising expenses
up ¥1.8bn
・Sales promotion expenses
up ¥1.7bn
・Personnel expenses
・Other
down ¥0.7bn
up ¥1.1bn
Non-operating items: Equity method loss: ¥0.3bn
(down ¥0.8bn from last year’s profit of ¥0.6bn)
*After provision/reversal of reserve for returned unsold goods
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
7
FY2014 Full-year Forecasts
(¥ bn)
Full-year E
(new)
Full-year E
(previous)
YOY Change
Vs.
previous
E*
293.0
-3.0
-1.0%
299.0
-6.0
Self-Medication
178.9
-2.9
-1.6%
184.3
-5.4
Rx Pharmaceutical
114.1
-0.1
-0.1%
114.7
-0.6
Operating income
29.0 -12.7 -30.4%
30.5
-1.5
Ordinary income
37.0 -14.2 -27.8%
38.5
-1.5
Net income
24.0
25.5
-1.5
314.56
-
Net sales
EPS (Yen)
296.05
-8.7 -26.6%
-
-
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
8
FY2014: Business Forecast Revisions
Net sales: Revised downward ¥6.0bn based on the first-half performance
• Self-Medication Operation Group (down ¥5.4bn)
– Domestic (down ¥5.2bn):
Downward revision of forecast for leading brand sales reflecting
temporary factors in effect until the second quarter
• Lipovitan series
• Pabron series
• RiUP series
•
down ¥2.8bn
down ¥0.3bn
down ¥0.2bn
Prescription Pharmaceutical Operation Group (down ¥0.6bn)
– Intermediate products, etc.: Revised downward
Operating income, ordinary income and net income:
Revised downward ¥1.5bn
• SG&A expenses: Revised to reflect the first-half performance
• Equity in earnings of affiliated companies:
Revised from ¥1.4bn to ¥0.9bn
9
Initiatives for FY2014
• Self-Medication Operation Group (Taisho, Japan)
– Medium-term period of strengthening and nurturing brands
• Lipovitan series:
Stimulating demand and increasing new users
• Pabron series:
Steadily ensuring the leading share
• RiUP series:
Expanding the hair regrowth market
• Livita series:
Focusing on the lifestyle-related diseases field
• Self-Medication Operation Group (Overseas)
– Rapidly achieve consolidated sales ratio of 10%
• Develop businesses in growth markets centered on Asia
• Expand businesses by increasing presence in countries with
existing operations, using acquired businesses as a platform
10
FY2014: Forecasts for Leading
Brands/Products (Self-Medication, Japan)
(¥ bn)
Full-year E
(new)
YOY Change
Full-year E
(previous)
Vs.
previous
E*
Lipovitan series
64.0
-3.4
-5.1%
66.8
-2.8
Pabron series
25.7
-0.3
-1.0%
26.0
-0.3
RiUP series
14.0
-1.6
-10.3%
14.2
-0.2
Livita series
4.2
-0.5
-11.1%
4.8
-0.6
GI drugs series
4.0
-0.3
-6.4%
4.2
-0.2
NARON series
3.9
-0.2
-4.1%
4.1
-0.1
Colac series
3.4
-0.2
-4.7%
3.6
-0.2
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
11
FY2014 Forecasts: Overseas Business
Main components of net sales
(¥ bn)
Full-year
E
(new)
Overall Overseas Business
Self-Medication
overseas business
Overseas energy drinks
Overseas OTC drugs
Asia
Other
YOY Change
Full-year
E
(previous)
Vs.
previous
E*
27.7
+2.3
+9.2%
27.7
±0
27.7
+2.3
+9.1%
27.7
±0
9.4
+0.4
+4.8%
9.6
-0.2
17.4
+1.9
+12.4%
17.2
+0.2
14.7
+1.5
+11.5%
14.6
+0.1
2.7
+0.4
+17.5%
2.6
+0.1
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
12
Initiatives for FY2014
• Prescription Pharmaceutical Operation Group
– Sales and Marketing
• Further strengthen information provision as the leading
company in the infectious diseases field
• Nurture the osteoporosis agents Edirol and Bonviva
Expand the inflammatory / immunologic diseases field
• Strengthen information provision about the Type 2 diabetes
treatment Lusefi
Offer a new option for treating diabetes
– Research and Development
• Initiatives to create new drugs in the priority fields of
infectious diseases, orthopedic disorders, CNS, and
metabolic diseases
13
FY2014: Forecasts for Leading
Brands/Products (Prescription Pharmaceutical)
(¥ bn)
Full-year E
(new)
Full-year E
(previous)
YOY Change
Vs.
previous
E*
Infectious diseases field
ZOSYN
26.5
+1.1
+4.4%
27.0
-0.5
Clarith
13.8
-2.6
-15.9%
14.5
-0.7
OZEX
6.4
-0.8
-11.1%
6.9
-0.5
Inflammatory / immunologic diseases field
Edirol
16.5
+2.4
+17.4%
15.5
+1.0
3.6
+2.4
+193.4%
3.0
+0.6
Palux
7.0
-0.9
-11.2%
7.0
±0
Lusefi
2.7
+2.7
-
2.7
±0
Bonviva
Metabolic diseases field
E: Estimates
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
*Comparison with forecast of July 31, 2014
14
Factors Affecting FY2014 Full-year Forecasts
Net Sales and Profits
(Year-on-Year change)
Net sales
(down ¥3.0bn)
Self-Medication
(down ¥2.9bn)
Rx Pharmaceutical
(down ¥0.1bn)
Operating
income
(down ¥12.7bn)
Gross profit* : down ¥3.2bn
(Gross margin* FY13: 62.4%  FY14: 61.9%)
SG&A expenses
up ¥9.5bn
(Main factors behind changes)
・R&D expenses
up ¥0.6bn
・Advertising expenses
up ¥2.7bn
・Sales promotion expenses
up ¥2.7bn
・Personnel expenses
・Other
down ¥0.3bn
up ¥3.7bn
Non-operating items: Equity method income of ¥0.9bn (down ¥1.5bn)
*After provision/reversal of reserve for returned unsold goods
Note: Fractions of 1 billion are rounded down. Changes are calculated in millions of yen.
15
Prescription Pharmaceuticals:
New Drug Development
•
Changes since FY2014 1Q earnings announcement (July 31)
(As of October 31, 2014)
TT-063 (Anti-inflammatory analgesic patch formulation containing S-flurbiprofen)
Planned
application
Osteoarthritis (Before change: osteoarthritis and other conditions)
Changes
Phase 3  Filed for application
Announced filing for manufacturing and marketing approval on Oct. 20, 2014
NT-702
Planned
application
Changes
Asthma
Intermittent claudication caused by arteriosclerosis obliterans
Phase 2  Removed from pipeline
Removed from pipeline based on the decision to not participate in the
development of this drug as a result of a comprehensive review of the clinical
trial results and knowledge obtained to date
TS-121
Planned
application
Depression
Changes
Added to Phase 1
16
Prescription Pharmaceuticals:
New Drug Pipeline (1)
Drugs under development by Taisho Pharmaceutical: From Phase 2
(As of October 31, 2014)
Development with
In Japan/Overseas
Originator
Anti-inflammatory analgesic patch formulation
containing S-flurbiprofen
Osteoarthritis
TOKUHON
In Japan
TOKUHON
Antiresorptive bisphosphonate
Osteoporosis
Chugai
In Japan
Roche
Improvement of excessive daytime sleep
Central disorders of hypersomnolence
In-house
In Japan
Taisho
Description
Planned application
Filed for application
TT-063
(Topical)
Phase 3
CT-064*
(Oral)
Phase 2
TS-091
(Oral)
*CT-064: Generic name: Ibandronate Sodium Hydrate, Chugai Pharmaceutical development code: RG484
17
Prescription Pharmaceuticals:
New Drug Pipeline (2)
Drugs under development by Taisho Pharmaceutical: Phase 1
(As of October 31, 2014)
Target disease
In-house/Licensed-in
In Japan/Overseas
TS-071*
(Oral)
Type 2 diabetes
In-house
Overseas
TS-111
(Oral)
Depression
In-house
Overseas
TS-121
(Oral)
Depression
In-house
Overseas
Phase 1
*TS-071： Generic name: Luseogliflozin Hydrate, Product name: Lusefi
18
Trends in R&D Expenses
2Q of FY2014: ¥10.1bn (down ¥0.6bn YOY)
(Breakdown) Self-Medication: about same;
Rx Pharmaceutical: down ¥0.6bn
FY2014 full-year forecasts: Reduced ¥0.8bn to ¥22.5bn (up ¥0.6bn YOY)
(Breakdown of reduction) Self-Medication: down ¥0.3bn;
Rx Pharmaceutical: down ¥0.5bn
(¥ bn)
(Fiscal year)
19
Dividends
• Annual dividend for FY2014 (forecast): ¥110 per share
– Interim dividend:
¥50 per share in December 2014 (forecast)
Year-end dividend (forecast):
¥60 per share
Dividends per share and payout ratio
(Yen) 150
60%
120*
*
110
110
100
40%
36.9%
37.2%
Dividends per share (left scale)
Payout ratio (right scale)
27.3%
50
20%
0
*Includes the commemorative
dividend for the 100th anniversary
of the founding of Taisho
Pharmaceutical
0%
2012
2013
2014E
(Fiscal year)
20