Otsuka Holdings Co., Ltd.

Business Details

Centered on Otsuka Pharmaceutical Co., Ltd. and Taiho Pharmaceutical Co., Ltd., this segment manufactures and sells prescription pharmaceuticals (therapeutic drugs) and IV infusion/clinical nutrition products both domestically and internationally. It focuses on four priority areas—psychiatric/neurological, oncology, autoimmune, and rare diseases—with the US, Europe, Japan, and Asia as its main markets. In Q1 FY2026 (ending March 2026), revenue was ¥453,822 million, making it the core segment accounting for approximately 72.0% of consolidated total revenue. R&D expenses of ¥77,826 million were invested, with focus on nurturing the next-generation pipeline (the Next 8 products).

Recent Overview

Revenue grew across all products, but the Samsca decline due to generic entry was a headwind, and increased R&D expenses caused a slight decline in core operating profit

In Q1 FY2026 (ending March 2026), revenue for the Pharmaceutical Business grew to ¥453,822 million (up 8.6% year on year), driven by Rexulti (+25.5%), Abilify Asimtufii (+59.4%), and Abilify Maintena (+12.8%). On the other hand, generic entry for Samsca in the US caused that product's revenue to decline 44.7%, and increased R&D expenses for the Next 8 products (Ulotaront, ASTX030, repinatrabit, and others) pressured profit, resulting in core operating profit of ¥114,307 million (down 1.9% year on year), a slight decline. Additionally, on March 27, 2026, the company agreed to make Transcend Therapeutics, Inc. (which is developing the PTSD treatment candidate TSND-201) a wholly owned subsidiary, with completion expected during Q2 FY2026 (upon completion, consideration of $700 million plus an earn-out of up to $525 million).

Key Products

Growth Drivers

• Increased prescriptions of Rexulti driven by indication expansion in the US and Japan (Alzheimer's disease agitation) (Q1 FY2026 revenue of ¥94,956 million, up 25.5% year on year)
• Expanding switching demand for Abilify Asimtufii (once-every-two-months formulation) in the US and Europe (up 59.4% year on year)
• New revenue contribution from Voyzact (cibeprelimab) following accelerated approval for IgA nephropathy in the US (November 2025)
• Revenue contribution from the IV infusion business (Otsuka ICU Medical) launched in the US from May 2025
• Increase in royalty income
• Acquisition of the PTSD treatment candidate TSND-201 and expansion of the psychiatric/neurological pipeline through the acquisition of Transcend Therapeutics, Inc.
• Progress on approval applications and Phase III trials for the Next 8 products (Ulotaront, ASTX030, repinatrabit, and others)
• New revenue from Dawnzera (donidalorsen, for hereditary angioedema) following approval in Europe in January 2026

Risks

• Revenue decline due to generic entry following the end of the exclusive marketing period for Samsca/Jynarque (tolvaptan) in the US (Q1 FY2026 revenue of ¥42,741 million, down 44.7% year on year)
• Pressure on core operating profit margin due to increased R&D expenses (¥77,826 million per quarter for the Pharmaceutical Business) associated with investment in the Next 8 products
• Reduction in the future pipeline due to the strategic discontinuation of development of ulotaront (major depressive disorder), OPC-214870 (epilepsy), and TAS1553 (acute myeloid leukemia)
• Risk of impairment losses related to pharmaceutical R&D (¥288 million recorded in Q1 FY2026)
• Impact on profitability from US drug pricing reform and stricter rebate regulations
• Foreign exchange risk (a large portion of revenue depends on overseas markets such as North America and Europe)
• Financial burden and development risk associated with the acquisition of Transcend Therapeutics, Inc. (consideration of $700 million upon completion plus an earn-out of up to $525 million)
• Concerns over transportation delays and cost increases for certain products and raw materials due to the impact of the situation in the Middle East