Otsuka (4578) Q4 2024 earnings summary

Executive summary

• Revenue rose 15.4% year-over-year to ¥2,329,861 million, driven by strong growth in pharmaceuticals and nutraceuticals, especially core products and overseas markets.

• Profit attributable to owners surged 182.1% to ¥343,120 million, with operating profit up 131.8% to ¥323,564 million, aided by one-time US tax adjustments.

• Major acquisition of Jnana Therapeutics Inc. completed in September 2024, expanding the R&D pipeline in rare diseases and autoimmune fields.

• Pharmaceutical revenue grew 17.1% to ¥1,629,032 million, led by REXULTI/RXULTI, LONSURF, ABILIFY ASIMTUFII, and "Next 8" products.

• Nutraceutical revenue increased 15.2% to ¥557,043 million, with notable gains in "For Women's Health" and overseas markets.

Financial highlights

• Business profit increased 37.7% year-over-year to ¥430,463 million; gross margin and business profit margin improved as sales grew in key segments.

• Basic earnings per share rose to ¥633.76 from ¥224.10; return on equity reached 13.4% (up from 5.3%).

• Total assets grew to ¥3,739,251 million, with equity attributable to owners at ¥2,733,580 million.

• Operating cash flow reached ¥653,100 million, up ¥77,000 million from the previous year.

• Cost of sales ratio improved by 1.9ppt; business profit margin rose to 18.5% (+3.0ppt year-over-year).

Outlook and guidance

• FY2025 revenue forecast at ¥2,380,000 million (+2.2%), with business profit expected to decline 12.9% to ¥375,000 million due to generic competition for JINARC/JYNARQUE in the U.S.

• Net profit for FY2025 expected to fall 19.9% to ¥275,000 million, excluding prior year’s one-time tax benefit.

• R&D expenses to increase 12% to ¥352,000 million, focusing on pipeline assets like sibeprenlimab, ulotaront, and JNT-517.

• Business profit before R&D expenses projected at ¥727,000 million, offsetting JYNARQUE’s loss of exclusivity by growth in other drivers.

• ROE expected to remain above 10%.