KISSEI PHARMACEUTICAL CO., LTD.

Business Details

Centered on the manufacture and sale of prescription pharmaceuticals, with additional purchase and sale of healthcare foods. Domestically, the segment focuses on the urology, renal/dialysis, and rare disease fields, with pharmaceutical wholesalers such as Alfresa and S.M.D. as principal sales channels. Overseas, the segment pursues a licensing-out strategy centered on Yselty (Linzagolix). The segment accounted for 80.0% of consolidated net sales in FY2026 (ending March 2026), remaining the core business, but the Pharmaceuticals segment fell into an operating loss due to increased R&D expenses.

Recent Overview

Sales increased but the segment fell into an operating loss due to higher R&D expenses, while regulatory risk regarding Tavneos materialized.

Pharmaceuticals segment net sales for FY2026 (ending March 2026) rose 3.5% year on year to ¥77,950 million. Rare disease drugs drove growth, reaching ¥15,377 million (up 36.3% year on year), but an increase in selling, general and administrative expenses—primarily R&D expenses—caused the segment to fall into an operating loss of ¥4,524 million (versus operating income of ¥4,684 million in the prior period). In addition, a major risk event occurred regarding Tavneos: the FDA proposed withdrawal of U.S. approval, and the EMA also initiated a review over data integrity concerns. Meanwhile, the licensing strategy continued to advance, with Yselty newly launched domestically and in Taiwan, and a sublicensing agreement for Olutasidenib concluded in Taiwan (subsequent event).

Key Products

Growth Drivers

• Continued growth in rare disease drugs (Tavneos, Korsuva, Tavalisse) (¥15,377 million in FY2026 (ending March 2026), up 36.3% year on year)
• Domestic new launch of Yselty (Linzagolix) (March 2026) and expanded licensing-out to Taiwan and Canada
• Solid growth in renal/dialysis drugs (¥17,255 million, up 10.5% year on year)
• Progress in preparations for domestic approval application of Olutasidenib and monetization through the Taiwan sublicensing agreement
• Development progress for Matsupexole (KDT-3594) following achievement of the primary endpoint in the late-stage Phase II clinical trial
• Expansion of the in-house drug discovery pipeline with the start of domestic Phase I clinical trials for KSP-0914, KSP-0576, and KSP-0930
• Strengthened open innovation through the establishment of the Boston Open Innovation Office

Risks

• Significant risk to the rare disease business from the FDA's proposed withdrawal of U.S. approval for Tavneos (announced April 27, 2026) and the EMA's initiation of a data integrity review
• Risk of continued operating losses due to increased selling, general and administrative expenses, primarily R&D expenses (segment operating loss of ¥4,524 million in FY2026 (ending March 2026))
• Profit pressure from ongoing drug price containment policies, including drug price revisions (interim revision in April 2025, revision in April 2026)
• Decline in export and overseas licensing revenue (¥6,691 million, down 13.9% year on year) and associated volatility risk (uncertainty over milestone and running royalty payments)
• Drug price revisions and competitive pressure affecting existing products, including a decline in urology drug sales (¥22,332 million, down 4.5% year on year)
• Risk of increased costs associated with large-scale in-licensing (in-licensing costs for products such as Veligrotug / Elegrobart)
• Profit pressure from a rising trend in the cost of sales ratio