Global Healthcare Analyst

Tina Banerjee

Equity Bottom-Up

<ul>
<li>
<a href="https://www.smartkarma.com/entities/sawai-group-holdings-co-ltd" target="_blank" data-smartkarma-citation="entities:35512:1" rel="noopener">Sawai Group Holdings (4887 JP)</a> is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.</li>
<li>Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.</li>
<li>The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.</li>
</ul>



Sawai Group Holdings (4887 JP) is negatively impacted by drug reimbursement pricing in Japan. H1FY23 revenue, operating profit, net profit decreased 1%, 36% y/y, and 29%, y/y, respectively.
Generic pharmaceutical companies are more affected by the drug price revisions than their branded counterparts. In addition, APIs are impacted by increases in the cost of oil and exchange rates.
The sustainability of the U.S. business rebound is still uncertain. We want to watch Sawai from sidelines and wait for full-year FY23 results, FY24 guidance, and NHI pricing decision.


Sawai Group Holdings (4887 JP): Continued Price Erosion Is Weakening Earnings Prowess

<ul>
<li>Driven by continued strong performance of Viltepso and other partnered drugs, <a href="https://www.smartkarma.com/entities/nippon-shinyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:6634:1" rel="noopener">Nippon Shinyaku (4516 JP)</a>  is expected to report accelerated revenue growth momentum.</li>
<li>Viltepso is expected to be the top selling drug of Nippon Shinyaku in FY23. For FY23, the drug is expected to report revenue of ¥14.7 billion (+90% y/y).</li>
<li>In November, Nippon Shinyaku launched Fintepla (fenfluramine) for the treatment of seizures in patients with Dravet syndrome (DS) as an add-on therapy to other anti-epileptic medicines in Japan.</li>
</ul>


Driven by continued strong performance of Viltepso and other partnered drugs, Nippon Shinyaku (4516 JP)  is expected to report accelerated revenue growth momentum.
Viltepso is expected to be the top selling drug of Nippon Shinyaku in FY23. For FY23, the drug is expected to report revenue of ¥14.7 billion (+90% y/y).
In November, Nippon Shinyaku launched Fintepla (fenfluramine) for the treatment of seizures in patients with Dravet syndrome (DS) as an add-on therapy to other anti-epileptic medicines in Japan.


Nippon Shinyaku (4516 JP): Viltepso Has Strong Muscle Power; New Seizure Drug Launch in Japan

<ul>
<li>
<a href="https://www.smartkarma.com/entities/chugai-pharmaceutical-co-ltd" target="_blank" data-smartkarma-citation="entities:4489:1" rel="noopener">Chugai Pharmaceutical (4519 JP)</a> shares declined 2% since we published our bearish note on the company in December. We remain bearish on the name.</li>
<li>Chugai is betting big on Actemra, Hemlibra, and Ronapreve for achieving 2022 revenue target. However, these have bleak outlook due to competition and uncertainty regarding COVID-19 prevalence globally.</li>
<li>Chugai does not have any big launches expected this year. Pipeline has less visibility for compensating the revenue loss from the patent expired products.</li>
</ul>



Chugai Pharmaceutical (4519 JP) shares declined 2% since we published our bearish note on the company in December. We remain bearish on the name.
Chugai is betting big on Actemra, Hemlibra, and Ronapreve for achieving 2022 revenue target. However, these have bleak outlook due to competition and uncertainty regarding COVID-19 prevalence globally.
Chugai does not have any big launches expected this year. Pipeline has less visibility for compensating the revenue loss from the patent expired products.


Chugai Pharmaceutical (4519 JP): Key Drugs Are Facing Competition; 2022 Target Seems Aggressive

<ul>
<li>Chugai’s in-house drug, Actemra is recommended by the WHO for the treatment of hospitalized COVID-19 patients. In-licensed drug Ronapreve is approved for the treatment of mild to moderate COVID-19 patients.</li>
<li>Actemra and Ronapreve together are expected to contribute 29% of total revenue in 2021. Approval of oral COVID-19 anti-viral pill will pressurize both the drugs in 2022 and beyond.</li>
<li>Chugai’s recently in-licensed gene therapy drug candidate for Duchenne muscular dystrophy will have to compete with existing drug and other pipeline candidates in Japan.  </li>
</ul>


Chugai’s in-house drug, Actemra is recommended by the WHO for the treatment of hospitalized COVID-19 patients. In-licensed drug Ronapreve is approved for the treatment of mild to moderate COVID-19 patients.
Actemra and Ronapreve together are expected to contribute 29% of total revenue in 2021. Approval of oral COVID-19 anti-viral pill will pressurize both the drugs in 2022 and beyond.
Chugai’s recently in-licensed gene therapy drug candidate for Duchenne muscular dystrophy will have to compete with existing drug and other pipeline candidates in Japan.  


Chugai Pharmaceutical (4519 JP): Actemra Loses Its Sheen on Arrival of Oral COVID-19 Pill

<ul>
<li>By succeeding to launch at least one distinctive product each year, <a href="https://www.smartkarma.com/entities/nippon-shinyaku-co-ltd" target="_blank" data-smartkarma-citation="entities:6634:1" rel="noopener">Nippon Shinyaku (4516 JP)</a> increased both revenue and operating profit for nine fiscal years in a row.</li>
<li>The company’s new drug Viltepso, targeting 8% of Duchenne muscular dystrophy patient population has an estimated peak sale of more than $400 million.  </li>
<li>By FY24, the company plans to launch one new in-house drug for myelofibrosis, which is preparing to go for phase 2 trial.</li>
</ul>


By succeeding to launch at least one distinctive product each year, Nippon Shinyaku (4516 JP) increased both revenue and operating profit for nine fiscal years in a row.
The company’s new drug Viltepso, targeting 8% of Duchenne muscular dystrophy patient population has an estimated peak sale of more than $400 million.  
By FY24, the company plans to launch one new in-house drug for myelofibrosis, which is preparing to go for phase 2 trial.


Nippon Shinyaku (4516 JP): New Drugs and Rich Pipeline Enhance Conviction on Future Growth

Japan

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.

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.

Sosei Group Corporation is a holding company which was established through reorganization.  The Group companies are biopharmaceutical companies specializing in drug development.  Sosei Group enters into license agreements primarily with US, EU, and Japanese companies to market the licensed drugs in Japan and find alternative usage on such drugs.

TOWA PHARMACEUTICAL CO., LTD. produces generic drugs mainly for elderly.  The Company also wholesales medicine and medical products of other pharmaceuticals.

KISSEI PHARMACEUTICAL CO., LTD. manufactures and sells a variety of prescription drugs.  The Company's main products are for cholesterol, high blood pressure, digestion, allergy, circulatory and respiratory diseases, and Parkinson's disease.

KAKEN PHARMACEUTICAL CO., LTD. develops, produces, and sells pharmaceuticals and agrochemicals.  The Company's products are mainly for nervous, circulatory, respiratory, digestive, urinary, sensory, and metabolic systems.  Kaken Pharmaceutical also manufactures antibiotics and feed additives.  The Company as well manufactures air purifiers and operates real estate business.

TORII PHARMACEUTICAL CO., LTD. produces and sells pharmaceuticals.  The Company promotes medical products of its parent company, Japan Tobacco. Torii Pharmaceutical operates building maintenance and management business as well as shipping business.

Mochida Pharmaceutical Co., Ltd. produces and sells a variety of pharmaceuticals and skin care products.  The Company's main product is circulatory agents. Mochida Pharmaceutical also distributes medical instruments and equipment used for surgery and diagnosis.

KYORIN Holdings, Inc. is a holding company who manages Kyorin Group including Kyorin Pharmaceutical.  The Group manufactures and distributes prescription medicine and quasi-drugs, and diagnostic drugs.  Kyorin also manufactures and markets medical tools and equipment, health foods, and cosmetics as well as developing  medical products with other pharmaceutical companies.

Luye Pharma Group Ltd focuses on the research and development, production, and sales of pharmaceutical drugs for orthopedics, neurology, gastroenterology, and hepatology. The Company also sells active ingredients, R&D results, and patents of new drugs, as well as providing research services on a contractual basis.

Zhejiang Conba Pharmaceutical Co., Ltd. develops and manufactures pharmaceutical products. The Company's products include Chinese traditional medicines.

Zhejiang Conba Pharmaceutical Co, Ltd. (600572 CH)

Granules India Limited is a global pharmaceutical company engaged in the manufacturing and selling of Active Pharmaceutical Ingredients (APIs), Pharmaceutical Formulation Intermediates (PFIs) and Finished Dosages (FDs).

Zhejiang Jingxin Pharmaceutical Co., Ltd. manufactures and markets tablets, capsules, injections, and other pharmaceutical products.  The Company's main products include anti-infectious agents and cardiovascular medicines.

Zhejiang Jingxin Pharmaceutical Co., (002020 CH)

Wockhardt Limited, spun off from Wockhardt Life Sciences Limited, specializes in the production of pharmaceuticals, in both generic and prescription forms. The Company has develop brands in a variety of segments, including anti-infectives, pain & inflammation, cough, psychiatry, medical nutrition, vaccines, active pharmaceutical ingredients and bio-technology.

Heska Corporation discovers, develops, manufactures, and markets companion animal health products, primarily for dogs, cats, and horses.  The Company also offers diagnostic and patient monitoring equipment, as well as diagnostic laboratory products in the United States and Europe.

Jubilant Pharmova Limited operates as a pharmaceuticals company. The Company offers products and services across the pharma value chain that includes manufacturing and supply of radiopharmaceuticals, developing therapies, and drug discovery and development services.

Caplin Point Laboratories, Ltd. manufactures wide range of ointments, creams and other external application preparations in addition to the regular segments of pharmaceutical formulations.

Zhejiang Jolly Pharmaceutical Company Limited develops, produces and sells Chinese medicine. The Company's main products are Wuling powder and Wuling capsules.

Zhejiang Jolly Pharmaceutical (300181 CH)

ANI Pharmaceuticals, Inc. is an integrated specialty pharmaceutical company. The Company develops, manufactures and markets branded and generic prescription pharmaceuticals. ANI manufactures oral solid dose products, as well as liquids and topicals.

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.

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Nippon Shinyaku (4516 JP)

Sawai Group Holdings (4887 JP): Continued Price Erosion Is Weakening Earnings Prowess

In H1FY23, revenue from Japan declined 7%, mainly due to drug price revisions in several consecutive years. Generic drug makers are more affected...

Tina Banerjee