ENVALITH
杏林製薬株式会社 logo

KYORIN Pharmaceutical Co., Ltd.

4569・Prime Market・Pharmaceuticals

Official website
杏林製薬株式会社 logo
KYORIN Pharmaceutical Co., Ltd.4569

Business

Kyorin Pharmaceutical Co., Ltd. (Kyorin Pharmaceutical Group) was founded in 1923 and marked its 100th anniversary in 2023 as a domestic manufacturer of prescription pharmaceuticals. It operates as a single-segment business entity comprising four companies: Kyorin Pharmaceutical Co., Ltd., Kyorin Rimedio Co., Ltd., and Kyorin Pharmaceutical Group Factory Co., Ltd., supplying prescription drugs such as the overactive bladder treatment "Beova", the allergic disease treatment "Dezalex", and the airway mucus regulator "Mucodyne" to medical institutions and pharmacies nationwide through major pharmaceutical wholesalers (Alfresa, Medipal, Suzuken, and Toho Pharmaceutical). The company focuses on pain, autoimmune diseases, and neuromuscular diseases as priority therapeutic areas, and is pursuing a transformation toward a new-drug-centered business structure that combines proprietary drug discovery with active in-licensing activities.

Business Model

Of net sales of ¥126,257 million, new pharmaceuticals etc. (domestic) accounted for ¥87,113 million (approximately 69%), and generic drugs accounted for ¥38,451 million (approximately 30%). In addition to in-house drug creation, the company expands its development pipeline through licensing from overseas pharmaceutical companies, retains domestic marketing rights, and sells products via four pharmaceutical wholesalers (the top four wholesalers together account for approximately 59% of net sales). Milestone and royalty income from the overseas out-licensing of in-house created products (vibegron, KRP-M223, etc.) is also one of the company's revenue sources.

Company Strengths

Achieved a new drug ratio of 55.4%, exceeding the Mid-Term Business Plan Stage 1 target (new drug ratio of 50% or more). The core overactive bladder treatment "Beova" and allergic disease treatment "Dezalex" maintained sales growth even amid the impact of the drug price revision (in the 5% range), and sales of new pharmaceuticals, etc. (domestic) trended steadily at ¥87,113 million (up 3.5% year on year).

Under Mid-Term Business Plan Stage 1 (FY2023 to FY2025), the company achieved 7 in-licensing deals, exceeding the target of 6. Through accumulated agreements with Bayer (KRP-S124), HinjBio (KRP-A225), Biodol (KRP-126), UBE Corporation, and others, the company has built a diverse pipeline in the pain, autoimmune, and neuromuscular disease areas.

At the end of FY2026 (ending March 2026), net assets stood at ¥142,425 million and total assets at ¥195,455 million, maintaining a high equity ratio of approximately 72.9%. While repaying ¥4,800 million in short-term borrowings to reduce interest-bearing debt, the company retains the financial capacity to fund capital expenditures of ¥3,955 million from its own funds.

ENVALITH's Perspective

Operating profit for FY2026 (ending March 2026) fell sharply to ¥3,567 million (down 71.6% year on year), mainly due to the reversal of the one-time contract payment income recorded in the previous fiscal year associated with the out-licensing of the in-house discovered compound "KRP-M223" to Novartis (overseas new drug sales down 92.2% year on year to ¥693 million), combined with a ¥1,545 million increase in R&D expenses related to upfront payments for in-licensing "KRP-A225" and "KRP-126," among other items. While this is not a structural deterioration in earnings but largely due to temporary factors, operating profit is projected to remain at a low level of ¥2,000 million in the next fiscal year (FY2027, ending March 2027) as well, and attention should be paid to the timeline for profit recovery.

On April 24, 2026, the company entered into a basic agreement to transfer its generic drug business (excluding authorized generics) to "Iyakuhin Kyoso Kiko Co., Ltd. (tentative name)." The transfer is scheduled to take effect on April 1, 2027, with the final agreement expected by the end of September 2026. Generic drug sales stood at ¥38,451 million in FY2026 (ending March 2026), accounting for approximately 30% of total sales, and close scrutiny is needed regarding the impact of the reduced sales scale and changes in the earnings structure following the transfer on performance from the next fiscal year onward. The risk that negotiations may fail to reach a conclusion cannot be ruled out either.

Consolidated sales for FY2027 (ending March 2027) are projected at ¥121,800 million (down 3.5% year on year), with the expected entry of generic drugs competing with the mainstay product "Dezalex" explicitly cited as a factor behind the sales decline. This coincides with the external factor of the April 2026 drug price revision (Kyorin Pharmaceutical Co., Ltd. in the 4% range). On the other hand, R&D expenses are projected to decrease by ¥2,800 million year on year, with cost reduction effects expected to support profit. However, the projected operating profit of ¥2,000 million (down 43.9% year on year) remains at a low level, and the key to the stock's valuation will be the concretization of a medium-term earnings recovery scenario driven by pipeline progress.

Growth Strategy

Under Vision 110 -Stage2-, the company is prioritizing the acquisition of in-licensed products and concentrating management resources on the new pharmaceuticals business

The second-stage medium-term plan began in April 2026. The company will allocate maximum financial and human resources with the highest priority on acquiring in-licensed products and other assets that serve as medium- to long-term growth engines, while promoting the acquisition of products expected to contribute to earnings at an early stage. This builds on the track record achieved in Stage1, where 7 in-licensing deals were completed, exceeding the target of 6.

Kyorin Rimedio Co., Ltd. and the Takaoka and Inami plants of Kyorin Pharmaceutical Group Factory Co., Ltd. will be transferred to a new company led by Daito Pharmaceutical Co., Ltd., enabling concentration of management resources on the new pharmaceuticals business. The authorized generic business is excluded from the transfer. This measure addresses structural issues in the generic drug industry (drug price revisions, excessive competition, inefficiency) while also contributing to stable supply.

Phase 3 clinical trials have begun for KRP-114VP (Beova pediatric indication); Phase 2 preparations are underway for KRP-S124 (obstructive sleep apnea); confirmatory trials are in progress for KRP-DT123 (tinnitus treatment app) and KRP-DC125 (chronic cough treatment app). KRP-A225 (SLE) is undergoing a Phase 1 trial conducted by HinjBio. Meanwhile, KRP-R120 (interstitial lung disease) failed to meet its primary endpoint in a global Phase 3 trial, and future direction is currently under discussion.

In the next fiscal year (FY2027, ending March 2027), the company expects increased sales of Beova, Lasvic, and Mucodyne. Dezalex sales are expected to decline due to the entry of generic competitors. Forecast sales of new pharmaceuticals, etc. (domestic) are ¥79,600 million (down from ¥87,113 million in the current fiscal year). Despite the headwind of drug price revisions (in the mid-4% range), the company aims to maintain the proportion of new drug sales through expanded prescriptions of its core products.

Last updated: July 19, 2026