EIKEN CHEMICAL CO.,LTD.

Business Details

The Eiken Chemical Group operates under a single-segment structure engaged solely in the Diagnostic Reagents Business (Single Segment). The company manufactures and sells reagents for microbiological, urinalysis, immunoserological, and biochemical testing, as well as Instruments and Food/Environmental Culture Media and medical device/genetic-related products. Domestic sales are primarily conducted through pharmaceutical wholesalers, while overseas sales are centered on Fecal Occult Blood Test Reagents and the Tuberculosis Testing System (TB-LAMP). Net sales for FY2026 (ending March 2026) were ¥41,899 million, of which ¥11,457 million (27.3% of total) was generated overseas.

Recent Overview

Recorded a gain of ¥2,004 million from the transfer of a Chinese subsidiary's equity, boosting net profit by 66.5%

In FY2026 (ending March 2026), net sales grew steadily by 3.4% year on year to ¥41,899 million. On the other hand, due to volatility in overseas markets stemming from the closure of USAID and changes in sales composition, operating profit declined 2.7% and ordinary profit declined 11.1%, reflecting a decrease in core business profitability. However, following the transfer of the entire equity interest in Eiken Biotechnology (China) Co., Ltd. (effective September 30, 2025), the company recorded a gain of ¥2,004 million on the transfer of investment in affiliated company as extraordinary income, resulting in a substantial increase in profit attributable to owners of parent to ¥3,708 million (up 66.5% year on year). Contract manufacturing previously handled by the Chinese subsidiary is being consolidated into the Nogi Plant to improve production efficiency. Capital expenditures related to the construction of a new production building in Nogi and the relocation of the head office increased property, plant and equipment by ¥1,216 million.

Key Products

Growth Drivers

• Continued expansion of overseas demand for Fecal Occult Blood Test Reagents (expansion of age eligibility for colorectal cancer screening in various countries and increase in newly adopting countries)
• Expanded adoption of TB-LAMP in Africa and India (establishing its position as a WHO-recommended test) and continued LAMP method patent royalty income
• Significant increase in medical device sales (including products licensed from Tosoh Corporation)
• Domestic adoption of MINtS (lung cancer companion diagnostic system) driven by insurance coverage
• Improved production efficiency and cost competitiveness through consolidation of production at the Nogi Plant following the transfer of the Chinese subsidiary's equity interest
• Forecast for FY2027 (ending March 2027): net sales of ¥42,000 million (up 0.2% year on year) and operating profit of ¥3,070 million (up 5.2% year on year), reflecting expected improvement in profitability

Risks

• Continued price pressure in the domestic clinical diagnostic reagents market due to healthcare cost containment policies
• Risk of volatility in overseas markets due to the closure of USAID (impact already materialized in FY2026, ending March 2026)
• Rising logistics and procurement costs due to soaring resource and raw material prices and yen depreciation
• Uncertainty in the business environment due to geopolitical risks (U.S. trade policy, monetary policy of major countries)
• Downward trend in profit margins due to changes in sales mix (declining share of high-margin items)
• Profit attributable to owners of parent for FY2027 (ending March 2027) is forecast at ¥2,070 million (down 44.2% year on year), reflecting the reversal of the prior-year extraordinary gain
• Increase in interest-bearing debt (new long-term borrowings of ¥2,650 million) associated with large-scale capital expenditures such as the construction of the new Nogi production building and head office relocation, and deterioration in the cash flow to interest-bearing debt ratio (from 0.6 years to 1.6 years)