SEIKAGAKU CORPORATION

Business Details

Adopts a fabless business model with no sales department, outsourcing sales to affiliated companies in Japan and overseas. Mainly focused on joint function improving agents, ophthalmic surgery aids, and lumbar disc herniation treatments, partnering with Kaken Pharmaceutical domestically and Zimmer Biomet, among others, overseas. Management resources are concentrated on research, development, and manufacturing, with royalty income also received in a milestone-based structure. Net sales for FY2026 (ending March 2026) were ¥24,493 million (down 11.0% year on year).

Recent Overview

The disappearance of royalty income combined with the decline in overseas pharmaceutical sales caused the Pharmaceuticals segment to fall into an operating loss

For FY2026 (ending March 2026), Pharmaceuticals segment net sales were ¥24,493 million (down 11.0% year on year), and the segment loss was ¥1,635 million (compared to a profit of ¥523 million in the prior period). The largest factor was the 99.9% decline in royalty income from ¥2,598 million in the prior period to ¥1 million. Overseas pharmaceutical sales also declined 4.4% due to the decrease in Supartz FX. On the other hand, the pipeline advanced, with SI-449 obtaining domestic approval in April 2026 and SI-6603 completing resubmission to the FDA in March 2026.

Key Products

Growth Drivers

• Potential for U.S. approval and market launch of SI-6603 (lumbar disc herniation treatment) following completion of FDA resubmission
• Creation of new product sales and global expansion following domestic approval of anti-adhesion material SI-449 in April 2026
• Progress of Gel-One's domestic Phase III clinical trials and commercialization through the joint development and sales alliance with Ono Pharmaceutical Co., Ltd.
• Increase in patient numbers for joint function improving agents and ophthalmic surgery aids due to the growing domestic elderly population
• Strengthening of the global production structure and expansion of contract manufacturing through capital investment and technology transfer to overseas subsidiary Dalton Chemical Laboratories Inc.
• Response to the shift toward fewer-dose products (such as Gel-One) in the U.S. market

Risks

• Continued decline in Supartz FX sales due to the shift to fewer-dose products (1 to 3 doses) in the U.S. joint function improving agent market
• Impact on price and volume from the expansion of centralized purchasing systems by government and provincial authorities in China
• Decline in unit prices due to domestic drug price reductions (ARTZ, Opegan Series, etc.)
• Uncertainty over the review outcome following SI-6603's FDA resubmission (contingent on addressing findings related to manufacturing facilities, drug substance, and formulation control)
• Uncertainty over the impact of U.S. government policy on the pharmaceutical industry (tariffs and drug price reduction policies)
• Risk of significant earnings fluctuation depending on development progress, since royalty income is milestone-based (down 99.9% year on year in FY2026 (ending March 2026))
• Erosion of overseas pharmaceutical sales due to the yen's appreciation (the projected exchange rate for FY2027 (ending March 2027) is ¥155 to the U.S. dollar)