TAIKO PHARMACEUTICAL CO.,LTD.

Business Details

The core business manufacturing and selling over-the-counter drugs such as "Seirogan," "Seirogan Toui A," and "Seirogan Quick C." Domestically, products are supplied to general consumers through pharmacies and drugstores, while overseas expansion centers on the Hong Kong and Taiwan markets and extends across Asia. The main active ingredient, Japanese Pharmacopoeia wood creosote, is manufactured in-house, with manufacturing outsourced to the subsidiary Daiko TEC Co., Ltd. The "Seirogan" brand, with a history of over 120 years, maintains high recognition both domestically and internationally, occupying a core position in the antidiarrheal drug market.

Recent Overview

Domestic sales declined 27.0% year on year, while overseas sales increased 130.6% due to growth in Hong Kong and Taiwan

Net sales in the Pharmaceuticals Business for Q1 FY2026 (ending December 2026) were ¥858 million (down 13.2% year on year). Domestically, sales fell sharply to ¥659 million (down 27.0% year on year) due to a combination of factors including continued supply shortages of "Seirogan," the resumption of supply by competing products, and a decrease in inbound demand. Overseas, however, sales expanded rapidly to ¥198 million (up 130.6% year on year) due to increased shipment volumes to the Hong Kong and Taiwan markets. Segment profit was ¥160 million (down 49.0% year on year) due to increased costs related to strengthening the supply system, and the profit margin declined to 18.6%. Preparations are underway for equipment upgrades and other measures aimed at shortening lead times and improving productivity from the second half of the fiscal year onward.

Key Products

Growth Drivers

• Policy of concentrating investment in the Pharmaceuticals Business and strengthening the equity of the Seirogan brand under the medium-term management plan (2026-2028)
• Strengthening of the supply system through the advancement of preparations such as equipment upgrades aimed at shortening lead times and improving productivity from the second half of the fiscal year onward
• Expansion of overseas sales through increased shipment volumes to the Hong Kong and Taiwan markets (overseas net sales of ¥198 million in Q1 FY2026, ending December 2026, up 130.6% year on year)
• Planned advancement of marketing measures based on the policy of increasing advertising expenses ahead of the summer demand season
• Acquisition of new users through the introduction of new products such as "Seirogan Toui A Portable" and WEB promotions

Risks

• Risk of continued supply constraints for "Seirogan" (equipment upgrades and lead time reduction are underway, but the supply issue remains unresolved)
• Deterioration in profitability due to rising raw material and manufacturing costs (segment profit margin of 18.6% in Q1 FY2026, ending December 2026, a significant decline from 31.7% in the same period of the prior year)
• Risk of losing domestic market share due to the resumption of supply by competing products (domestic market size was sluggish at 94.0% of the same period of the prior year)
• Risk of impact on production due to soaring material prices and procurement delays caused by the situation in the Middle East
• Foreign exchange risk (overseas net sales account for approximately 23% of Q1 segment net sales, with Hong Kong and Taiwan as the main markets)
• Risk of a decline in inbound demand and downside risk to domestic demand due to price increases and a slowdown in consumption