KOBAYASHI PHARMACEUTICAL CO.,LTD.

Business Details

The Domestic Business consists of three categories: Healthcare (Pharmaceuticals & Oral Hygiene Products), Household Products (Fragrance & Deodorizers, Sundries), and Body Warmers (the in-house mail-order business was discontinued at the end of December 2025). Key products include Anmerutsu, Nodo Nu-ru, Bluelet, Shoshuumoto, and Sawaday. Major sales channels are PALTAC Corporation (39.7% of sales) and Arata Corporation (10.2% of sales). This is the Group's largest segment, accounting for approximately 69% of total Group sales, providing a wide range of OTC pharmaceuticals and household products to domestic consumers.

Recent Overview

Sales continued to recover, but profit declined 33.7% year on year due to higher SG&A expenses

In 1Q FY2026 (January–March 2026), the Domestic Business secured sales growth of ¥24,437 million (up 3.8% year on year). Continued marketing activities since the full-scale resumption of TV advertising in July 2025 contributed to a continued recovery trend in both Healthcare (+1.8%) and Household Products (+4.2%). On the other hand, segment profit fell sharply to ¥1,684 million (down 33.7% year on year). Company-wide SG&A expenses increased to ¥16,087 million (from ¥14,147 million in the same period of the prior year), which weighed on profit. Note that sales through the in-house mail-order website and call center were discontinued at the end of December 2025, and the mail-order category has ceased to exist.

Key Products

Growth Drivers

• Continuation of the recovery trend in Healthcare and Household Products sales following the full-scale resumption of TV advertising in July 2025
• Sales increase driven by new product launches such as "Chumecure," "Shoshuumoto ZERO for Toilets," and "Liquid Bluelet Okudake Sterilizing EX Deodorizer Pro" (10 items launched in spring 2025, 12 items in autumn 2025)
• Expansion of inbound demand due to the increase in the number of foreign visitors to Japan
• Sales effect expected in FY2026 (ending December 2026) from full-year implementation of advertising activities (Domestic Business sales plan at the ¥123,000 million level)
• Improved quality of new product development and concentration of management resources through the establishment of SBUs (Strategic Business Units)

Risks

• Risk of additional compensation expenses related to the red yeast rice (beni-koji) incident (litigation and other matters remain difficult to reasonably estimate at this time; a product recall-related loss of ¥318 million was recorded as an extraordinary loss in 1Q FY2026)
• Risk of delays in the startup of the new Sendai plant (expected to require more time and cost than initially anticipated to comply with pharmaceutical manufacturing guidelines)
• Profit pressure in FY2026 (ending December 2026) from increased depreciation and running costs associated with the startup of the new Sendai plant and the Saito Manufacturing Lab
• Structural decline in sales due to the discontinuation of the mail-order business (the in-house mail-order website and call center sales were discontinued at the end of December 2025)
• Risk of sales concentration with the major sales channel PALTAC (accounting for 39.7% of sales)
• Pressure on cost of sales from rising raw material prices and energy costs
• Decline in profit margin due to increased SG&A expenses (in 1Q FY2026, gross margin improved but operating margin declined significantly)