Fuso Pharmaceutical Industries, Ltd.

Business Details

The company manufactures and sells prescription drugs such as injectables centered on infusion solutions, dialysis solutions for artificial kidneys, and medical devices, and also undertakes contract manufacturing of prescription drugs. Its main product is Kindaly (Dialysis Solution for Artificial Kidney). Sales are mainly to major pharmaceutical wholesalers (Alfresa, Mediceo, Suzuken, Toho Pharmaceutical, etc.). Manufacturing bases are dispersed across two locations, Okayama and Ibaraki, in the east and west, establishing a stable supply system.

Recent Overview

Sales increased, but operating income declined 36.1% due to a higher cost-of-sales ratio and increased R&D expenses

In FY2026 (ending March 2026), net sales increased to ¥62,307 million (up 2.9% year on year), driven by the promotion of sales of generic drugs related to kidney and dialysis treatment. On the other hand, due to a greater-than-expected rise in the cost-of-sales ratio resulting from increases in raw material costs and labor costs (cost of sales of ¥46,312 million, up 5.2% year on year) and increased research and development expenses related to DMX-200, operating income declined significantly to ¥2,639 million (down 36.1% year on year) and ordinary income to ¥2,349 million (down 37.9% year on year). Net income turned positive at ¥2,011 million (compared with a loss of ¥3,288 million in the prior year due to the recording of a provision for litigation-related losses of ¥8,744 million). In addition, based on the medium-term management policy "FUSO Vision 2030 Next Stage," the company announced a plan to construct a second formulation building (tentative name) on the grounds of the Okayama plant for the purpose of establishing a new powder-type dialysis solution manufacturing line, and concluded a syndicated loan agreement totaling ¥13,400 million arranged by Sumitomo Mitsui Banking Corporation.

Key Products

Growth Drivers

• Sales expansion through the promotion of sales of generic drugs related to kidney and dialysis treatment
• Increased manufacturing and sales through substitute supply of infusion solutions and injectables for other companies' products
• Establishment of a new powder-type dialysis solution manufacturing line and expanded production capacity through construction of the second formulation building (tentative name) at the Okayama plant
• Improved production efficiency and cost reduction through relocation and consolidation of Daito plant functions into the Okayama plant
• New revenue expansion through contract manufacturing of other companies' products, etc.
• Future commercialization of new products through progress in DMX-200 research and development

Risks

• Pressure on profitability due to a greater-than-expected rise in the cost-of-sales ratio resulting from increases in raw material and labor costs
• Pressure on profitability due to healthcare cost optimization measures such as drug pricing system reforms and policies promoting the use of generic drugs
• Financial burden associated with the patent infringement lawsuit with Toray Industries, Inc. (currently under appeal to the Supreme Court) (provision for litigation-related losses of ¥8,744 million already recorded, advance payment of ¥8,744 million already made)
• Increased research and development expenses and development risk related to DMX-200 and other products
• Surging energy prices and related raw material prices due to escalating tensions in the Middle East
• Structurally low operating margin due to persistently high logistics costs stemming from the heavy nature of the products
• Increased financial burden from large-scale capital investment associated with the construction of the second formulation building (syndicated loan of ¥13,400 million)
• Risk to stable supply due to natural disasters, pandemics, and other factors