Chugai Pharmaceutical (4519) Q2 2024 earnings summary

Executive summary

• Revenue declined 4.6% year-over-year to ¥552.9B, mainly due to the absence of Ronapreve COVID-19 supply, but core business excluding Ronapreve grew 10.9%.

• Operating profit rose 13.3% to ¥262.8B, and net income increased 10.6% to ¥189.5B, driven by strong Hemlibra and Actemra exports, offsetting domestic declines from Ronapreve supply completion and NHI drug price revisions.

• Operating margin improved to 47.5%, reflecting a favorable product mix and cost structure.

• Strategic focus remains on the TOP I 2030 plan, with refinements to accelerate R&D, early-stage clinical development, and annual global product launches.

• Earnings forecast for FY2024 remains unchanged, anticipating record operating profit and net income.

Financial highlights

• Domestic sales declined 30.7% due to NHI drug price revisions, generic competition, and Ronapreve supply completion, while new products like Vabysmo showed growth.

• Overseas sales increased by 28.2% year-over-year to ¥268.4B, led by Hemlibra and Actemra exports.

• Other revenue, including Hemlibra royalties and one-time income, rose 18.9% to ¥67.3B.

• Cost to sales ratio improved to 33.0% from 46.3% last year due to product mix changes.

• Free cash flow for the first half was ¥169.5B; net cash increased to ¥815.7B.

Outlook and guidance

• Full-year guidance expects record-high operating profit and net income, with strong momentum in exports and royalty income.

• Overseas sales and Hemlibra royalties are expected to accelerate in the second half due to tiered royalty structures.

• Progress toward 2030 goals is on track, with updated reforms in drug discovery, development, technology, and value delivery.