CHUGAI PHARMACEUTICAL CO., LTD.

Business Details

The Chugai Pharmaceutical Group operates as a single Pharmaceuticals Business segment, integrating research, development, manufacturing, and sales of prescription pharmaceuticals. Domestically, the company sells oncology and specialty products through wholesalers, while overseas, exports to Roche account for the majority of revenue. The company has established a highly productive business model that leverages Roche's extensive pipeline while also utilizing Roche's platform for the global expansion of its own originated products (Hemlibra, Enspryng (SA237/RG6168), etc.).

Recent Overview

In Q1 FY2026 (ending March 2026), both revenue and profit achieved double-digit growth, with progress against the full-year forecast at approximately 24%, indicating a solid start

For Q1 FY2026 (ending March 2026) (January to March), revenue was ¥321,747 million (up 11.5% year on year), IFRS operating profit was ¥158,765 million (up 16.2% year on year), and Core Operating Profit was ¥163,270 million (up 17.1% year on year). Domestically, Vabysmo (RG7716) and Lunsumio (RG7828) grew, while overseas, exports of Hemlibra (ACE910/RG6013) to Roche and exports of NEMLUVIO to Galderma increased substantially. The cost of sales ratio for products improved by 2.0 percentage points year on year to 31.7%. Progress against the full-year Core Operating Profit forecast of ¥670,000 million stood at 24.4%. There has been no revision to the full-year earnings forecast announced on January 29, 2026. In the pipeline, there was progress including the approval of an expanded indication for Lunsumio (RG7828), the domestic launch of Elevidys (RG6356/SRP-9001), and the start of Phase III trials for the KRAS G12C inhibitor and PI3Kα inhibitor, while the company also announced the discontinuation of development of GYM329 for spinal muscular atrophy and facioscapulohumeral muscular dystrophy.

Key Products

Growth Drivers

• Expansion of Hemlibra (ACE910/RG6013) exports to Roche and continued growth in overseas product sales (up 14.9% year on year in Q1 FY2026 (ending March 2026))
• Substantial increase in NEMLUVIO exports to Galderma and increased royalty income driving growth in other revenue
• Substantial increase in domestic specialty area sales of Vabysmo (RG7716) (specialty area up 11.6% year on year)
• Contribution from new products through domestic market penetration and expanded indications for Lunsumio (RG7828) (approval obtained for combination use with Polivy for large B-cell lymphoma)
• Improvement in the cost of sales ratio for products (31.7%, a 2.0 percentage point improvement year on year) due to changes in product sales mix and foreign exchange effects
• Creation of a new revenue source through the domestic launch of Elevidys (RG6356/SRP-9001) (for Duchenne muscular dystrophy) in February 2026
• Enhancement of the mid- to long-term pipeline through the start of global Phase III trials for the KRAS G12C inhibitor (RG6330) and PI3Kα inhibitor (RG6114)
• Full-year FY2026 (ending December 2026) forecast of revenue of ¥1,345,000 million (up 6.9% year on year) and Core Operating Profit of ¥670,000 million (up 7.5% year on year)

Risks

• Continued downward pressure on domestic product sales from generic drug penetration and drug price revisions (decline in sales of mainstay products such as Avastin)
• Concentration risk related to reliance on sales to Roche (57.7% of Q1 FY2026 (ending March 2026) revenue)
• Uncertainty in the R&D pipeline, including the discontinuation of development of GYM329 for spinal muscular atrophy and facioscapulohumeral muscular dystrophy
• Risk of failure to expand indications for existing products, including the discontinuation of development of Tecentriq (RG7446) as a second-line treatment for hepatocellular carcinoma
• Impact of foreign exchange fluctuations (Swiss franc, euro, US dollar) on overseas product sales and cost of sales ratio
• Drug pricing and market access risk under a Value Based Healthcare (VBHC) environment amid strengthening healthcare cost containment policies in various countries
• Cost pressure from increased selling, general and administrative expenses (up 18.6% year on year)
• Impact of large-scale dividend payments on the financial base, with total net assets at the end of Q1 FY2026 (ending March 2026) decreasing by ¥118,017 million from the end of the previous fiscal year (mainly due to dividend payments of ¥241,920 million)