Kyowa Kirin Q2 FY2026: Core operating profit up 80% on strong Crysvita sales

Kyowa Kirin announced its Q2 FY2026 supplementary results on August 3, 2026. Quarterly revenue reached ¥145.2 billion (up 15% YoY), core operating profit hit ¥46.1 billion (up 80%), and net income grew 83% to ¥18.6 billion, marking a sharp rise in both sales and profits. The standout performer was Crysvita, the hypophosphatemia treatment, whose global sales climbed 27% to ¥73.1 billion: roughly half of total revenue. North America contributed ¥51.6 billion (US$325 million, up 19% in local currency). A weaker yen also provided a tailwind. Profitability improved markedly, with the core operating margin jumping to 31.8% from 20.3% a year ago, helped by a 20% drop in R&D expenses to ¥19.2 billion and disciplined SG&A growth. The result underscores a qualitative improvement in earnings structure led by the flagship drug.

Regional quarterly revenue breakdown:

North America, driven by Crysvita, accounted for 46% of total revenue and grew 27% to ¥67.0 billion, with solid local-currency gains as well. EMEA (Europe, Middle East, Africa) rose 17% to ¥20.2 billion, also benefiting from favorable exchange rates. The Other segment includes technology revenues and sales in Asia/Oceania. Technology revenue alone was ¥15.0 billion, up 20%, led by ¥10.7 billion in royalty income from the asthma drug benralizumab. Japan, however, fell 8% to ¥28.7 billion, weighed down by declines in darbepoetin KKF and G-CSF biosimilar Zarxio. Overseas sales now account for 78% of total revenue, highlighting the company's global expansion.

For the first half (January-June 2026), operating cash flow surged ¥41.5 billion year-on-year to ¥81.3 billion, bolstered by rising earnings. Cash and equivalents at end-Q2 stood at ¥265.1 billion, reflecting a rock-solid financial base. On shareholder returns, Kyowa Kirin maintains a progressive dividend policy targeting a dividend-on-equity (DOE) ratio of at least 4%. For FY2026, DOE is forecast at 4.1%, suggesting steady dividend increases. No share buyback was announced this quarter, but the strong cash generation capacity leaves room for enhanced returns down the line.

Despite the strong quarter, several risks and challenges remain:

• Foreign exchange risk: With overseas sales at about 80% of the total, a sharp yen appreciation could hurt earnings. The full-year assumptions (US$1 = ¥150, £1 = ¥205, €1 = ¥180) are more yen-strong than current levels.
• Product mix: Heavy reliance on Crysvita means increased competition or pricing pressure could slow growth. In Japan, some products are eroding due to generics.
• Pipeline uncertainty: Next-generation growth drivers such as ziftomenib and OTL-203 remain in clinical trials, with success and approval timelines uncertain.
• R&D spending swings: While R&D costs fell temporarily this quarter, they could rise again as pipeline programs advance.

Kyowa Kirin kept its FY2026 full-year forecasts unchanged:

Given the strong first half, achieving these targets looks well within reach. Core operating profit is already 51% of the full-year forecast, raising the possibility of an upward revision. The foreign exchange assumptions (USD/JPY at 150) appear conservative, and if current weak-yen conditions persist, they could provide further upside.