IFRS results

Revenue for the nine months under review was ¥837.6 billion (an increase of 2.0% year on year), operating profit for the nine months under review was ¥317.6 billion (a decrease of 17.2% year on year), and net income for the nine months under review was ¥234.3 billion (a decrease of 13.8% year on year). These results include non-Core items, which are excluded from the Core results that Chugai adopts to manage recurring business activities, such as amortization of intangible assets of ¥1.2 billion, impairment loss of intangible assets of ¥5.1 billion, restructuring expenses of ¥6.3 billion, and expenses associated with the Early Retirement Incentive Program of ¥10.4 billion. Operating profit and net income have decreased compared to the same period of the previous fiscal year, due to the one-time impact of recognizing the lump-sum payment of ¥90.7 billion as a result of the settlement agreement between Chugai and Alexion Pharmaceuticals, Inc., in the first quarter of the previous fiscal year.

Core results

Revenue for the nine months under review was ¥837.6 billion (an increase of 14.8% year on year), due to a significant increase in sales and other revenue.

Of revenue, sales were ¥742.1 billion (an increase of 15.1% year on year). Domestic sales grew over the previous fiscal year primarily due to the growth of the new products such as Polivy^® and Vabysmo^®, and the recognition of the supply of Ronapreve^® to the government, as well as the favorable sales of the mainstay products including Enspryng^®, Hemlibra^®, and Tecentriq^®, while sales were affected by the NHI drug price revisions and the market penetration of generic drugs. Overseas sales increased compared to the previous fiscal year due to the increase in the exports of Hemlibra^® and Alecensa^® to Roche. Other revenue was ¥95.5 billion (an increase of 12.9% year on year) primarily due to the increase in royalty income related to the intellectual property rights and profit-sharing income of Hemlibra^®. Furthermore, cost to sales ratio was 43.1%, a 2.4 percentage point rise year on year, reflecting the impact of foreign exchange and other factors. As a result, gross profit amounted to ¥517.3 billion (an increase of 10.8% year on year).

Research and development expenses amounted to ¥121.7 billion (an increase of 20.5% year on year) due to investments into drug discovery/early development including the full-scale operation of Chugai Life Science Park Yokohama, and increases associated with the progress of development projects, etc. Selling, general and administration expenses amounted to ¥71.4 billion (an increase of 4.5% year on year), due to an increase in various expenses. Other operating income (expense) was income of ¥16.3 billion (¥1.5 billion of income for the same period of the previous fiscal year) due to the recognition of income from disposal of product rights and gain on sale of property, plant and equipment. As a result, core operating profit was ¥340.5 billion (an increase of 13.9% year on year) and core net income was ¥250.3 billion (an increase of 17.5% year on year).

(Billions of yen)

Revenue

Core revenue is expected to decrease to ¥1,070.0 billion (a decrease of 8.4% year on year).

Of core revenue, domestic sales are expected to decrease to ¥541.7 billion (a decrease of 17.3% year on year), due to the decrease in the sales in Ronapreve^® for supply to the government, in addition to the negative impact from intensifying competition associated primarily with launches of biosimilars and generics as well as NHI drug price revisions, despite the sales growth in new products such as Polivy^®, Vabysmo^®, Enspryng^®, etc., and the mainstay products including Tecentriq^® and Hemlibra^®. Sales from the supply of Ronapreve^® to the government are expected to reach ¥81.2 billion (a decrease of 60.1% year on year), while domestic sales excluding Ronapreve^® are favorably expected to be ¥460.5 billion (an increase of 2.1% year on year).

Overseas sales are expected to decrease to ¥378.3 billion (a decrease of 1.6% year on year), due to the decreases in sales of Actemra^® and Hemlibra^®, despite the sales growth of Alecensa^®. The export of Hemlibra^® to Roche is expected to be ¥181.5 billion (a decrease of 5.0% year on year), due to the decrease in export volume reflecting the Roche Group’s optimization of its inventory levels and the effects of the declining Swiss franc-denominated export price from Chugai to Roche as result of the global market penetration of Hemlibra^®, despite the positive effects on sales of the depreciating yen.

Other revenue is expected to reach ¥150.0 billion (an increase of 16.6% year on year). Royalty and profit-sharing income are forecasted to increase to ¥133.0 billion (an increase of 8.0% year on year), due to an increase in income related to Hemlibra^® in addition to an increase in one-time income.

Core Operating Profit / Core EPS

Gross profit is expected to decrease to ¥665.0 billion (a decrease of 4.0% year on year), with the assumption that the cost to sales ratio is 44.0%, which is a 1.7 percentage point improvement year on year, due to a change in the product mix, etc., in addition to the above outlook on Core revenue.

Research and development expenses are expected to increase to ¥165.0 billion (an increase of 14.8% year on year) due to investments into drug discovery/early development including the operation of Chugai Life Science Park Yokohama, the progress of development projects, etc., and selling, general and administration expenses are expected to increase slightly by 1.2% year on year to ¥100.0 billion. Other operating income (expense) is expected to be ¥15.0 billion of income (FY 2022: ¥1.4 billion of income) mainly due to the impact of income from disposal of product rights.

Core operating profit is expected to be ¥415.0 billion (a decrease of 8.1% year on year) and Core net income is expected to be ¥306.0 billion (a decrease of 3.7% year on year). Core EPS is forecasted to be ¥186.00 (a decrease of 3.7% year on year).