TOKYO – Earnings at major Japanese pharmaceutical companies announced for the first quarter of this year or for the entire fiscal 2015 were mixed at best.

At Kyowa Hakko Kirin Co. Ltd., operating income fell by 8.8 percent to ¥8.5 billion (US$77.44 million) on net sales of ¥88 billion for the three months ended March 31. For the fiscal year ending Dec. 31, the company expects net sales to fall 3.7 percent to ¥351 billion and operating income to decline 31.5 percent to ¥30 billion.

In explaining the decline, the firm said "international sales decreased year on year due mainly to the impact of exchange rates and the decline in licensing revenue." The company lost licensing revenue from Abstral (fentanyl) and Pecfent (nasally administered fentanyl) in Europe and the Americas, which drove down profit for the company. Abstral and Pecfent treat cancer pain.

Kyowa Hakko Kirin currently has a number of products in its pipeline. Notably, the company has applied for approval for KHK4827, an anti-IL-17 receptor for treating psoriasis, in Japan. In nephrology, the company is conducting phase III trials in Japan on the calcium receptor agonist KHK7580 for secondary hyperparathyroidism patients receiving hemodialysis. C-Met inhibitor ARQ 197, for patients with c-Met diagnostic-high inoperable hepatocellular carcinoma treated with one prior sorafenib therapy, is also in a phase III study in Japan.

Operating profit at Chugai Pharmaceutical Co. Ltd., meanwhile, decreased 3.4 percent to ¥20 billion on revenue of ¥120 billion, a rise of 2.4 percent. The company expected operating profit to fall a sharp 21.7 percent for the year through Dec. 31 to ¥71 billion on revenue of ¥495 billion, a 0.8 percent decline.

"Overseas sales amounted to ¥20.8 billion [a decrease of 8.8 percent year on year] due mainly to the declining export unit price of Actemra to Roche," the company said. In Japan, "oncology products sales were ¥51 billion [an increase of 7.1 percent year on year]. This increase was due to the steady expansion in sales of major drugs such as Avastin [bevacizumab] and Perjeta [pertuzumab], in addition to the contribution by the products launched in 2014, which are Kadcyla [trastuzumab emtansine] and Alecensa [alectinib]."

Analysts Narumi Nakahara and Akinori Ueda of Goldman Sachs said in a research note they were raising their profit estimates for Chugai by 2 percent to 4 percent between fiscal 2016 and 2020, and noted developments in the pipeline. "We look for news on prospects for pipeline drugs via the release of data for anticancer drug RG7446/atezolizumab . . . and Alecensa, and a decision on a partner for atopic dermatitis treatment nemolizumab/CIM331."

Eisai Co. Ltd., which reported its results for the fiscal year through March 31, saw revenue flat at ¥548 billion, as revenue rose 83 percent from the 12 months earlier to ¥52 billion. The company expects in fiscal 2016, through the end of March 2017, that revenue will rise 6 percent to ¥580 billion, bringing in operating profit of ¥54 billion, a 3 percent increase from fiscal 2015.

"Revenue for the group increased due to the growth of anticancer agents Halaven [eribulin mesylate] and Lenvima [lenvatinib] and anti-epileptic agent Fycompa [perampanel], as well as the high growth recorded by the group's pharmaceutical businesses in China and Asia, but decreased overall owing to factors such as competition between long-listed products and generic products in the Japan, finishing at ¥547.9 billion [down 0.1 percent year on year]," the company said.

DAIICHI PROFITS UP

Daiichi Sankyo Co. Ltd., meanwhile, saw profit surge for the fiscal year ended March 31 by 75.2 percent to ¥130.4 billion, on sales of ¥986.4 billion, up 7.3 percent. However, a large part of the reason for the surge was due to the impact of the merger of Ranbaxy Laboratories Ltd. with Sun Pharmaceutical Industries Ltd., which distorted Daiichi Sankyo's results the previous fiscal year.

In terms of revenue, Daiichi said the increase "mainly owed to growth in sales of mainstay products in Japan, the U.S. and Asia, combined with the positive impact of currency movements [valued at about ¥13 billion]."

On operating profit, the company said it "increased despite an increase in research and development expenses, largely due to higher gross profit combined with lower selling, general and administrative expenses."

Like most pharma companies in Japan, Daiichi Sankyo is expecting to take a hit from the rise of generics over the short term. "Revenue is expected to decrease by 6.7 percent from fiscal 2015, partially because of the loss of patent protection for olmesartan beginning in the U.S., along with adverse effects of the NHI price revision in Japan, while Daiichi Sankyo will focus on efforts for increasing sales of edoxaban, expanding sales of mainstay products in Japan, and extending sales of Injectafer of a U.S.-based company Luitpold Pharmaceuticals," the company said of its outlook for the coming fiscal year.

Goldman Sachs' Nakahara and Ueda said over the longer term there was a chance of Daiichi Sankyo profits rising.

"The focus points now are ¥57 billion in cost cuts via restructuring outlined in the medium-term plan and the probability of these cuts enabling the company to reach FY3/18 operating profits of ¥100 billion," they said.