ENVALITH
室町ケミカル株式会社 logo

MUROMACHI CHEMICALS INC.

4885・Standard Market・Pharmaceuticals

Official website
室町ケミカル株式会社 logo
MUROMACHI CHEMICALS INC.4885

Business

Muromachi Chemical Co., Ltd. was founded in 1917 and is headquartered in Omuta City, Fukuoka Prefecture, and is listed on the Tokyo Stock Exchange Standard Market. In its Pharmaceuticals Business, the company offers an integrated "API Total Service" covering the import, synthesis, purification, and analysis of active pharmaceutical ingredients (API), with domestic pharmaceutical companies and pharmaceutical trading companies as its main customers. In its Chemicals Business, the company provides liquid processing solutions centered on Ion Exchange Resin / Separation Membrane and water treatment equipment to semiconductor, electric power, and chemical manufacturers. The company has already decided to withdraw from its Health Foods Business (Stick Jelly ODM) by the end of FY2026 (ending May 2026), and going forward plans to concentrate management resources on its two remaining businesses, Pharmaceuticals and Chemicals.

Business Model

In the Pharmaceuticals Business, the company combines direct procurement from overseas API manufacturers (trading company function) with manufacturing, purification, and analysis at its own plants (manufacturer function), simultaneously achieving quality assurance and reduced procurement costs. In the Chemicals Business, in addition to purchasing and selling products such as Ion Exchange Resin, the company provides high-value-added services combining in-house processing, water treatment equipment design, and Contract Processing. Both businesses maintain their own analysis and development departments, and the ability to propose technical solutions to customer challenges serves as a source of differentiation.

Company Strengths

The company combines a direct procurement network from overseas API manufacturers in China, India, the Netherlands, and other regions with manufacturing and analytical capabilities through its own pharmaceutical synthesis plant and pharmaceutical development center. Its in-house testing system based on the Japanese Pharmacopoeia enables it to provide a consistent, end-to-end service covering everything from importing to manufacturing, processing, analysis, and testing, which serves as a key differentiator from competitors.

The company owns processing equipment for regenerating, drying, and grinding ion exchange resin that is rare even within Japan, and handles products from multiple manufacturers, including Lewatit® by Lanxess and Duolite™ by DuPont. It specializes in addressing specialized liquid treatment applications beyond pure water production, and possesses strong proposal capabilities for solving customer challenges by combining this with the know-how of its own analysis and development departments.

As of the end of FY2025 (ending May 2025), the equity ratio stood at 46.6%, exceeding the target of 35% or higher set in the Medium-Term Management Plan 2025. Against total assets of ¥5,264 million, net assets stood at ¥2,451 million. The company has secured a commitment line of ¥1,300 million and an overdraft facility of ¥300 million, maintaining financial flexibility for capital investment and business expansion.

ENVALITH's Perspective

Operating income for FY2026 (ending May 2026) achieved a substantial increase of ¥742 million (up 71.9% year on year), but as a result of recording an impairment loss of ¥398 million on fixed assets related to the pharmaceutical synthesis business as an extraordinary loss, net income for the period was limited to ¥163 million (down 32.4% year on year). Net income before taxes was ¥328 million, below the previous period's ¥350 million, illustrating a structure in which the strength of the core business was offset by the extraordinary loss. The review of contract processing items in the synthesis business involves a reassessment of the business plan, and continued monitoring is needed as a shift in the revenue structure within the pharmaceuticals business.

The earnings forecast for FY2027 (ending May 2027) projects revenue of ¥7,100 million (down 9.4% year on year), operating income of ¥550 million (down 26.0%), and ordinary income of ¥500 million (down 29.3%), indicating a substantial decline in profit. The main factors cited are an increase in indirect cost burden following the withdrawal from the Health Foods Business and a decline in profit margin due to changes in the sales composition within the Pharmaceuticals Business. External factors such as price inflation, foreign exchange fluctuations, and raw material price trends also remain unclear, and steady growth in both the pharmaceuticals and chemicals businesses is a precondition for achieving the forecast. Net income is projected to increase substantially to ¥350 million (up 114.7% year on year), but this is mainly due to a rebound from the one-time impairment loss recorded in the previous period.

Total assets at the end of FY2026 (ending May 2026) expanded to ¥6,352 million (up 20.7% year on year), while the equity ratio declined from 46.6% to 40.6%. Long-term borrowings scheduled for repayment within one year surged to ¥900 million (from ¥403 million in the previous period), and total current liabilities ballooned to ¥2,457 million (from ¥1,455 million in the previous period). This is the result of financing activities that raised ¥1,050 million through long-term borrowings, and the increase in short-term repayment burden could become a financial constraint. On the other hand, operating cash flow improved substantially to ¥808 million from ¥215 million in the previous period, indicating an improvement in cash generation capability.

Growth Strategy

Following the completion of its withdrawal from the Health Foods Business, the company aims to enhance medium- to long-term profitability by concentrating on its two core businesses, Pharmaceuticals and Chemicals

The company is diversifying its trading items and supply sources by expanding its procurement network for imported active pharmaceutical ingredients and leveraging alliances with overseas companies. Building on the significant growth in imported API sales achieved in FY2026 (ending May 2026), it aims to further strengthen its business foundation. A challenge is the expected near-term decline in profit margin due to changes in sales composition.

Building on the strong performance of new products launched in the second quarter, the company continues its efforts to expand sales of in-house manufactured APIs and secure orders for development projects. Through the utilization of the Pharmaceutical Development Center, the company aims to expand the profit contribution of its manufacturer function by launching in-house manufactured APIs in the future.

In addition to expanding sales of Ion Exchange Resin to the semiconductor and electric power industries, the company is promoting entry into new markets such as PFAS-related fields and the electricity market through the development of its development center. It aims to accelerate order acquisition by strengthening its expertise in liquid processing technology and its ability to propose solutions. In FY2026 (ending May 2026), the business achieved a 11.6% year-on-year increase in revenue and a 59.7% increase in profit.

The withdrawal from the Health Foods Business was completed as planned by the end of FY2026 (ending May 2026). Management resources such as personnel, manufacturing space, and warehouses that became available as a result of the withdrawal have been reallocated to the Pharmaceuticals and Chemicals businesses, promoting the strengthening of both. The company aims to improve medium- to long-term profitability while absorbing the temporary increase in indirect cost burden.

Last updated: July 17, 2026