Daily Brief Health Care: Ono Pharmaceutical, Beauty Farm Medical and Health Industry, Tokyo Stock Exchange Tokyo Price Index Topix and more

In today’s briefing:

Ono Pharmaceutical (4528 JP): Key Drugs On High Growth Trajectory; Pipeline Expands Beyond Opdivo
Pre-IPO Beauty Farm Medical and Health Industry – Hard to Make Money Due to Industry Characteristics
Isn’t FSA Too Forward-Thinking to Keep up with the Global Trend in Human Capital Disclosure?

Ono Pharmaceutical (4528 JP): Key Drugs On High Growth Trajectory; Pipeline Expands Beyond Opdivo

Ono Pharmaceutical (4528 JP) is an innovation driven pharmaceutical company, with major focus on oncology. Opdivo, Forxiga, and Orencia are the top three products, together contributing ~75% of product revenue.
While the competition intensified, use of Opdivo for malignant tumors was expanded to first-line treatment for NSCLC, esophageal cancer, and gastric cancer, resulting in FY22 sales of ¥112.4B (+14% y/y).
Ono’s second largest drug Forxiga is also on a double-digit growth path. The company has been expanding its pipeline beyond Opdivo by reinforcement of in-house research and in-licensing activities.

Beauty Farm Medical and Health Industry (BFM HK)’s solid growth has indicated that its business model works. But the industry tightening regulation and potential policy risk are our concerns.
As a downstream company in this industry, we are conservative about Beauty Farm’s profitability. Its profit space could be limited. The Company has weak bargaining power in the whole industrial chain.
Beauty Farm’s performance could continue to be under pressure due to weak recovery of domestic demand after three years of the pandemic, especially those non-rigid consumption demand.

The government’s application of human capital disclosure starting with FY3/2023 companies runs the risk of omitting process of fully discussing and internalizing concept of human capital with company’s management strategy.
The government’s policy change to make disclosure of quarterly financial results voluntary in exchange for mandatory disclosure of human capital will likely lead to a setback in information disclosure.
Various issues will likely emerge in the future: whether the 3 indicators mandated for disclosure correctly reflect the company’s human capital approach and whether they can be compared among companies.

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