Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/otsuka-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:12292:1" rel="noopener">Otsuka Holdings (4578 JP)</a> started 2022 on a strong note, with 13% y/y revenue growth in Q1. Growth was driven by four global products, which contributed 36% of total revenue.</li>
<li>Otsuka has terminated its global license agreements with Akebia Therapeutics related to vadadustat for the treatment of renal anemia and recorded an impairment loss of ¥24 billion.</li>
<li>Despite the impairment losses related to vadadustat, Otsuka reiterated 2022 guidance and expects double-digit growth in operating and net profits.</li>
</ul>



Otsuka Holdings (4578 JP) started 2022 on a strong note, with 13% y/y revenue growth in Q1. Growth was driven by four global products, which contributed 36% of total revenue.
Otsuka has terminated its global license agreements with Akebia Therapeutics related to vadadustat for the treatment of renal anemia and recorded an impairment loss of ¥24 billion.
Despite the impairment losses related to vadadustat, Otsuka reiterated 2022 guidance and expects double-digit growth in operating and net profits.


Otsuka Holdings (4578 JP) 1Q22: Global Products Continued Double-Digit Revenue Growth

Executive Director, Metrical Inc

Aki Matsumoto

Executive Director

Independent Leading Corporate Governance Research

Metrical Inc

METRICAL INC. is an independent leading Corporate Governance research firm in Japan where Corporate Governance is increasingly recognized as an important element on corporate management in these days. Thus, CG research and solutions would become an essential component of global capital markets and play important to contribute to transparency of the markets and maximize shareholders’ value in Japan. 

METRICAL INC. provides Corporate Governance research and analysis including rating services, and  also offers investment research and IR services with solutions and customized profound research on CG and IR issues.

<ul>
<li>Since I am interested in Eisai's corporate governance initiatives, this article would like to analyze them in conjunction with the situation of pharmaceutical companies.</li>
<li>Eisai has an outstandingly high rating, except for the fact that it has anti-takeover measures. The other 3 companies that have anti-takeover will need to improve corporate governance practices considerably.</li>
<li>The growth policy is reasonable and clearly explained, but there is still room for improvement in the use of the retained cash and disclosures in English for Eisai.</li>
</ul>


Since I am interested in Eisai's corporate governance initiatives, this article would like to analyze them in conjunction with the situation of pharmaceutical companies.
Eisai has an outstandingly high rating, except for the fact that it has anti-takeover measures. The other 3 companies that have anti-takeover will need to improve corporate governance practices considerably.
The growth policy is reasonable and clearly explained, but there is still room for improvement in the use of the retained cash and disclosures in English for Eisai.


Japan's Governance: Corporate Governance Evaluation of Pharmaceutical Companies

'Quantamental' Japan Specialist, LightStream Research

Campbell Gunn

'Quantamental' Japan Specialist

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Thematic (Sector/Industry)

<p style="text-align: center;"><strong>• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •</strong></p><div><p>Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.</p></div><div>
<p style="text-align: center;"><strong>• BEST &amp; WORST •</strong></p>
<p style="text-align: left;">Wednesday's 'best' large-cap announcements came from <a href="https://www.smartkarma.com/entities/hirose-electric-co-ltd" target="_blank" data-smartkarma-citation="entities:13513:1" rel="noopener">Hirose Electric (6806 JP)</a>, <a href="https://www.smartkarma.com/entities/brother-industries-ltd" target="_blank" data-smartkarma-citation="entities:6114:1" rel="noopener">Brother Industries (6448 JP)</a>, and <a href="https://www.smartkarma.com/entities/sony-corp" target="_blank" data-smartkarma-citation="entities:563:1" rel="noopener">Sony (6758 JP)</a>. The 'worst' were from <a href="https://www.smartkarma.com/entities/eisai-co-ltd" target="_blank" data-smartkarma-citation="entities:21001:1" rel="noopener">Eisai (4523 JP)</a>, <a href="https://www.smartkarma.com/entities/square-enix-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:15003:1" rel="noopener">Square Enix (9684 JP)</a>, and <a href="https://www.smartkarma.com/entities/z-holdings-corp" target="_blank" data-smartkarma-citation="entities:19603:1" rel="noopener">Z Holdings (4689 JP)</a>.  We would also note the relatively modest improvement in the trading companies.</p>
</div><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/604/original/2021-02-04_04-53-07.png?1612382019" class="editor-image img-responsive" data-smartkarma-image-id="186604"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/605/original/2021-02-04_04-54-02.png?1612382054" class="editor-image img-responsive" data-smartkarma-image-id="186605"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/606/original/2021-02-04_04-54-35.png?1612382089" class="editor-image img-responsive" data-smartkarma-image-id="186606"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/607/original/2021-02-04_04-55-18.png?1612382134" class="editor-image img-responsive" data-smartkarma-image-id="186607"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/608/original/2021-02-04_04-56-09.png?1612382183" class="editor-image img-responsive" data-smartkarma-image-id="186608"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/609/original/2021-02-04_04-56-48.png?1612382221" class="editor-image img-responsive" data-smartkarma-image-id="186609"></figure></section><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/186/610/original/2021-02-04_04-57-14.png?1612382245" class="editor-image img-responsive" data-smartkarma-image-id="186610"></figure></section><div style="text-align: center;" class="content-caption">     Source for all charts &amp; tables: Japan Analytics</div>

• RESULTS &amp; REVISIONS SUMMARY - 3rd FEBRUARY •Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a 2.1 percentage point decline in operating margins. Only 8% of companies were in the red for the quarter.  64% of the 53 annual forecasts/revision announcements scored positively, and the average Forecast/Revision score was +1.2 points.
• BEST &amp; WORST •
Wednesday's 'best' large-cap announcements came from Hirose Electric (6806 JP), Brother Industries (6448 JP), and Sony (6758 JP). The 'worst' were from Eisai (4523 JP), Square Enix (9684 JP), and Z Holdings (4689 JP).  We would also note the relatively modest improvement in the trading companies.
     Source for all charts &amp; tables: Japan Analytics

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

Equity Analyst, LightStream Research

Shifara Samsudeen, ACMA, CGMA

Equity Analyst

<p><a href="https://www.smartkarma.com/entities/eisai-co-ltd" target="_blank" data-smartkarma-citation="entities:21001:1" rel="noopener">Eisai Co Ltd (4523 JP)</a>  is a global R&amp;D based pharmaceutical company who has positioned neurology and oncology as its therapeutic areas of focus. Since October 2017, Biogen and Eisai have collaborated on the development and commercialisation of Aducanumab (BIIB037), an investigational treatment for Alzheimer’s disease. The US FDA accepted the Biologics License Application (BLA) for Aducanumab for review in August 2020 and was granted priority review status.</p><p>US FDA briefing documents (dated 04<sup>th</sup> November) states that the FDA staff have enough data to approve the treatment, which would become the first new Alzheimer’s therapy in nearly two decades. The briefing documents have been released ahead of a meeting of outside advisers who will issue a non-binding vote on whether to recommend Aducanumab’s approval. These experts are scheduled to meet on Friday, 06<sup>th</sup> November.</p><p>Eisai’s shares have climbed 18% during Thursday’s trading following the release of the FDA briefing document. In this insight, we take a look at Aducanumab, the collaboration agreement between Eisai and Biogen, and the impact on the company’s fundamental and valuation if the drug is approved by the FDA.</p>

Eisai Co Ltd (4523 JP)  is a global R&amp;D based pharmaceutical company who has positioned neurology and oncology as its therapeutic areas of focus. Since October 2017, Biogen and Eisai have collaborated on the development and commercialisation of Aducanumab (BIIB037), an investigational treatment for Alzheimer’s disease. The US FDA accepted the Biologics License Application (BLA) for Aducanumab for review in August 2020 and was granted priority review status.US FDA briefing documents (dated 04th November) states that the FDA staff have enough data to approve the treatment, which would become the first new Alzheimer’s therapy in nearly two decades. The briefing documents have been released ahead of a meeting of outside advisers who will issue a non-binding vote on whether to recommend Aducanumab’s approval. These experts are scheduled to meet on Friday, 06th November.Eisai’s shares have climbed 18% during Thursday’s trading following the release of the FDA briefing document. In this insight, we take a look at Aducanumab, the collaboration agreement between Eisai and Biogen, and the impact on the company’s fundamental and valuation if the drug is approved by the FDA.

Eisai: Shares Surge on Positive Review of Drug Candidate; Blockbuster Potential if Approved

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Quantitative Analysis

<p>The question has been asked about dividends in Japan and what they may look like for the remainder of this year and into 2021. </p><p>Japanese companies have grown revenues over the past ten years, and have grown net income quite a bit faster. In addition, payout ratios have risen on a normalized basis since their last-decade lows in 2014. Because net income has dropped in the past year while dividends paid out have risen, payout ratios have spiked sharply. With the very large amount of buybacks executed in the past fiscal year to March 2020, total payout to shareholders has been quite significant. </p><p>But COVID-19 has changed things. When companies announced earnings in April and May, a huge swath of corporate Japan neglected to provide forecasts. The largest number I have ever seen provided forecasts in ranges rather than as numbers. When Q1 earnings came around, many companies made a stab at full-year. Some have provided dividend guidance but net income in the April-June quarter along with forecasts for H1 and FY have given the Street some comfort to be able to forecast earnings and DPS. If one looks at the top 500, top 1000, and full set of companies in TOPIX on a like-for-like basis (where guidance exists), company guidance on both net income and dividends is below where the Street is (on a consensus basis). I expect, for the moment, that the Street still may have some to come down. There is every possibility that covid-19 aftershocks will produce some VERY bad numbers, but I do not expect that many companies to exceed forecasts by a wide margin. Some WFH and tech names may do well, but Japan is not NASDAQ (much to the chagrin of Japan's investors). </p><p>On the whole, there are significant discrepancies in forecasts among sectors - autos, airlines, materials are all bad - but interestingly, there is also huge discrepancy among market cap biases. Even on a like-for-like basis on coverage or guidance, the top 500 names see total dividend forecasts for the FY to March 2021 only 3% lower than what was paid in the year to March 2020. That seems like a relatively small drop. The consensus implied drop in DPS for the next 500 names seems considerably larger, though some of this may be to worse data quality as you go down the market cap scale. </p><p><em>A study of dividends this year and beyond continues below.</em></p>

The question has been asked about dividends in Japan and what they may look like for the remainder of this year and into 2021. Japanese companies have grown revenues over the past ten years, and have grown net income quite a bit faster. In addition, payout ratios have risen on a normalized basis since their last-decade lows in 2014. Because net income has dropped in the past year while dividends paid out have risen, payout ratios have spiked sharply. With the very large amount of buybacks executed in the past fiscal year to March 2020, total payout to shareholders has been quite significant. But COVID-19 has changed things. When companies announced earnings in April and May, a huge swath of corporate Japan neglected to provide forecasts. The largest number I have ever seen provided forecasts in ranges rather than as numbers. When Q1 earnings came around, many companies made a stab at full-year. Some have provided dividend guidance but net income in the April-June quarter along with forecasts for H1 and FY have given the Street some comfort to be able to forecast earnings and DPS. If one looks at the top 500, top 1000, and full set of companies in TOPIX on a like-for-like basis (where guidance exists), company guidance on both net income and dividends is below where the Street is (on a consensus basis). I expect, for the moment, that the Street still may have some to come down. There is every possibility that covid-19 aftershocks will produce some VERY bad numbers, but I do not expect that many companies to exceed forecasts by a wide margin. Some WFH and tech names may do well, but Japan is not NASDAQ (much to the chagrin of Japan's investors). On the whole, there are significant discrepancies in forecasts among sectors - autos, airlines, materials are all bad - but interestingly, there is also huge discrepancy among market cap biases. Even on a like-for-like basis on coverage or guidance, the top 500 names see total dividend forecasts for the FY to March 2021 only 3% lower than what was paid in the year to March 2020. That seems like a relatively small drop. The consensus implied drop in DPS for the next 500 names seems considerably larger, though some of this may be to worse data quality as you go down the market cap scale. A study of dividends this year and beyond continues below.

Japan

Kyowa Hakko Kirin Co.,Ltd. develops, manufactures, and markets pharmaceuticals. The Company's products include a protein produced by genetic recombination technology, an anti-anemia agent that attaches new sugar chains through partial modification of the amino acid sequence of human erythropoietin (EPO), and a glycoprotein, human erythropoietin.

Shionogi & Company Ltd., is a pharmaceutical company. The Company develops prescription & over-the-counter drugs and diagnostics.

ROHTO PHARMACEUTICAL CO., LTD. manufactures and markets pharmaceuticals and cosmetics products.  The Company's products include eyewash, bath soaps, gastrointestinal medicine, and hand cream.  Rohto Pharmaceutical also has a license agreement with its subsidiary, Mentholatum (US) to sell their brand products.  The Company also manufactures contact lenses and health foods.

Astellas Pharma Inc. is a pharmaceutical company committed to the therapeutic fields of Urology, Immunology including Transplantation and Infectious Diseases, Oncology, Neuroscience and DM Complications and Metabolic Diseases. With over 17,000 global employees, Astellas researches, develops, manufactures, and promotes its prescription drugs through subsidiaries in the US, Europe, and Asia

ONO PHARMACEUTICAL CO., LTD. manufactures and sells pharmaceuticals.  The Company mainly researches and develops prescription drugs.

SANTEN PHARMACEUTICAL CO., LTD. produces and sells ophthalmic medicine.  The Company manufactures a variety of products including eye drops and ointments. Santen Pharmaceutical also imports lenses and tools and equipment used by optometrists and produces anti-rheumatic drugs.

Nippon Shinyaku Co., Ltd. manufactures pharmaceutical and health foods products. The Company produces drugs for urinary, nerve, respiratory, and circulatory systems as well as analgesic and anti-inflammatory drugs.  Nippon Shinyaku also develops synthetic anti-bacterial agents.

TSUMURA & CO. manufactures and sells pharmaceutical products including Chinese medicines.  The Company also manufactures and sells bathing products, cosmetics, and other healthcare and toiletry products.  Tsumura & Co. sells its products in Japan and overseas markets.

HISAMITSU PHARMACEUTICAL CO., INC. produces and sells pharmaceutical products. The Company's main product is anti-inflammatory analgesic plasters and poultices sold under the brand name Salonpas.  Hisamitsu Pharmaceutical exports its products to North America and Southeast Asia.  The Company also researches and develops antibacterial products through its related company, RRF.

Sumitomo Dainippon Pharma Co., Ltd. mainly manufactures and markets pharmaceuticals for human and veterinary use. The Company also produces and sells livestock feeds, food additives, and chemical products, as well as conducts clinical pathology tests for animals. Sumitomo Dainippon Pharma conducts businesses across worldwide.

CSPC Pharmaceutical Group Limited, through its subsidiaries, manufactures and sells pharmaceutical products.  The Company's products include vitamin C, antibiotics and common generic drugs. The Company is also engages in the development of innovative drugs and antibiotics.

Catalent, Inc. provides delivery technologies and development solutions for drugs, biologics and consumer health products. The Company's oral, injectable, and respiratory delivery technologies address the diversity of the pharmaceutical industry including small molecules, large molecule biologics and consumer health products.

Cipla Limited manufactures and sells pharmaceutical and personal care products. The Company offers active pharmaceutical ingredients, and formulations in therapeutic areas, such as allergy, analgesic, anti malarial, anti-infectives, cardiology, dermatology and cosmeceuticals, diabetology, gastroenterology, steroids, iron chelators, nutritional products.

China Resources Sanjiu Medical & Pharmaceutical Co., Ltd. manufactures and markets medicines, healthcare products, and medical instruments.  Through its subsidiaries, the Company also operates in pharmaceutical trading, printing, food manufacturing, real estate development, and provides medical services.

China Resources Sanjiu Medical & Pharma (000999 CH)

Intra-Cellular Therapies Inc. researches and develops biopharmaceutical drugs. The Company engages in the research and development of small molecule drugs to treat neuropsychiatric and neurological diseases and other disorders of the central nervous system. Intra-Cellular Therapies offers its products to the medical industry.

Shanghai Fosun Pharmaceutical (Group) Co., Ltd. is a pharmaceutical company. Through its subsidiaries, the Company manufactures genetic medicines, Chinese traditional medicines, diagnostic products, and medical instruments, provides technology, marketing, and advertising services, as well as invests in import and export trading.

Shanghai Fosun Pharmaceutical (Group) (600196 CH)

Cadila Healthcare Ltd. manufactures, and markets healthcare solutions ranging from formulations, active pharmaceutical ingredients, vaccines, diagnostics, health and dietetic foods, animal healthcare to cosmeceuticals.  The Company's products are available in tablets, capsules, injections, liquids, dry syrups, powders, granules, and ointments.

Torrent Pharmaceuticals Ltd. manufactures bulk drugs and pharmaceutical formulations. The Company's formulations include cardio-vascular, psychotropic and anti-biotic drugs while its bulk drugs include atenolol, ciprofloxacin and norfloxacin. Torrent Pharmaceuticals has wholly owned subsidiaries in several regulated and less regulated international markets.

Dr. Reddy's Laboratories Limited provides a complete range of pharmaceutical services. The Company manufactures bulk drugs and formulations including verapamil and cephalexin. The Company also manufactures and exports molecules such as norfloxacin, ciprofloxacin, and varieties of semi-synthetic penicillin. The Company markets its products in India and around the world.

Lupin Limited manufactures bulk actives and formulations. The principal bulk actives manufactured by it include Rifampicin, Pyrazinamide, Ethambutol (anti-TB), Cephalosporins (anti-infectives) and cardiovasculars. The company also possesses competencies in phytomedicines, in which medicines are made out of plant and herbal resources supported by the discipline of modern medicine.

Eisai Co., Ltd. produces prescription drugs and medical equipment and sells mainly to sales agents and subsidiaries.  Through its subsidiary, Sanko Junyaku, the Company produces and sells diagnostic drugs.  Eisai also markets its products through related companies in the US, Europe, and Asia.  The Company also manufactures and sells foods, livestock feeds, chemical, and agrochemicals.

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Eisai Co Ltd (4523 JP)

Otsuka Holdings (4578 JP) 1Q22: Global Products Continued Double-Digit Revenue Growth

Otsuka reported 13% y/y revenue growth in Q1, driven by four global products and reiterated 2022 guidance. Despite recent pipeline blues, Otsuka’s...

Tina Banerjee

Japan's Governance: Corporate Governance Evaluation of Pharmaceutical Companies

Since I am interested in Eisai's corporate governance initiatives in the ESG meeting on Dec 21, this article would like to analyze them in...

Metrical Inc

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

Eisai: Shares Surge on Positive Review of Drug Candidate; Blockbuster Potential if Approved

Biogen and Eisai have collaborated on the development and commercialisation of Aducanumab, an investigational treatment for Alzheimer’s disease....

Shifara Samsudeen, ACMA, CGMA

Looking at Japan Dividends This Year

The question has been asked about dividends in Japan and what they may look like for the remainder of this year and into 2021. Japanese companies...

Travis Lundy

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Otsuka Holdings (4578 JP) 1Q22: Global Products Continued Double-Digit Revenue Growth

Otsuka reported 13% y/y revenue growth in Q1, driven by four global products and reiterated 2022 guidance. Despite recent pipeline blues, Otsuka’s...

Tina Banerjee

Japan's Governance: Corporate Governance Evaluation of Pharmaceutical Companies

Since I am interested in Eisai's corporate governance initiatives in the ESG meeting on Dec 21, this article would like to analyze them in...

Metrical Inc

🇯🇵 JAPAN • Results & Revisions ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​02/​​​​​​​​​​​​​​​03 Hirose, Eisai..

Of Wednesday's 100 results announcements, 78% scored positively for earnings momentum despite trailing revenues falling by 5.7% on average and a...

Campbell Gunn

Eisai: Shares Surge on Positive Review of Drug Candidate; Blockbuster Potential if Approved

Biogen and Eisai have collaborated on the development and commercialisation of Aducanumab, an investigational treatment for Alzheimer’s disease....

Shifara Samsudeen, ACMA, CGMA

Looking at Japan Dividends This Year

The question has been asked about dividends in Japan and what they may look like for the remainder of this year and into 2021. Japanese companies...

Travis Lundy

🇯🇵 JAPAN • Results & Revisions 02/03 Hirose, Eisai..