Otsuka Q2 FY2026: Revenue up 12.8%, lifts full-year forecast

Otsuka Holdings' consolidated revenue for the second quarter of FY2026 (the six months ended June 30, 2026) rose 12.8% year on year to ¥1,332.3 billion, while business profit climbed 17.3% to ¥280.5 billion. Net income attributable to owners of the parent jumped 24.3% to ¥215.6 billion, and operating profit increased 15.0% to ¥278.5 billion. The strong performance was led by the antipsychotic Rexulti (sales up 24.7% to ¥193.1 billion), the antineoplastic agent Lonsurf (up 14.2% to ¥56.8 billion), and the newly launched IgA nephropathy treatment Voyzact (¥17.1 billion). Long-acting injectables Abilify Maintena and Aristada also contributed, while the nutraceutical segment grew on overseas sales of Nature Made and Pocari Sweat. All segments reported higher revenue, and the gross profit margin improved. Based on the first-half results, Otsuka revised upward its full-year forecast, now projecting revenue of ¥2,725.0 billion (up 8.1% from the previous forecast), business profit of ¥470.0 billion (up 32.4%), and net income of ¥355.0 billion (up 34.0%). The revised outlook incorporates an earlier-than-planned US launch of the ADHD drug Centyriant and increased investment in Transcend’s PTSD candidate TSND-201, while assuming exchange rates of ¥158/USD and ¥185/EUR.

Medical-related business (71.4% of total revenue): Revenue rose 14.1% to ¥951.6 billion, and business profit grew 18.2% to ¥252.7 billion. The key growth driver was Rexulti, which saw strong prescription growth in the US for major depressive disorder and Alzheimer’s agitation, as well as expanded use in Japan. Lonsurf gained share in colorectal cancer with the bevacizumab combination. Long-acting injectable Abilify Maintena (sales ¥122.8 billion, +12.4%) and the two-month formulation Aristada (¥26.6 billion, +65.1%) saw continued patient conversions. In contrast, the V2-receptor antagonist Samsca/Jinarc lost US exclusivity in April 2025, causing sales to plummet 33.9% to ¥89.7 billion. The newly launched Voyzact (sparsentan) won accelerated approval in the US and is off to a strong start.

Nutraceutical-related business (22.5% of total revenue): Revenue increased 8.7% to ¥300.1 billion, with business profit up 7.4% to ¥38.7 billion. Pocari Sweat saw volume gains in the Philippines and Vietnam, and European health food subsidiary Nutrition & Santé benefited from favorable currencies. The women’s health category drove growth through Equelle subscription expansion and new channels for Yucora. Supplement brand Nature Made gained US market share. The new oxygen-based household product /zeroz contributed, and the health-life category jumped 15.9% year on year.

Consumer-related business: Revenue grew 10.1% to ¥17.4 billion, and business profit rose 7.9% to ¥13.6 billion. Mineral water Crystal Geyser performed steadily in e-commerce, while the Match drink brand expanded its youth following with Match Vitamin Mikan and jelly beverages.

Other businesses: Revenue climbed 14.5% to ¥64.9 billion, and business profit surged 24.0% to ¥5.8 billion. Functional chemicals benefited from robust automotive and electronics demand, and the logistics segment gained from expanded pharmaceutical joint distribution.

Total assets at the interim period end stood at ¥4,395.8 billion, up ¥198.3 billion from the previous fiscal year-end, largely due to a ¥116.9 billion increase in intangible assets from the Transcend acquisition, along with higher inventory and property, plant, and equipment. Total liabilities edged down ¥8.6 billion to ¥1,089.1 billion as bond redemptions reduced interest-bearing debt. Equity attributable to owners of the parent rose ¥206.9 billion to ¥3,306.7 billion, lifting the equity ratio to 73.7% (from 72.3%). Cash flow from operating activities was solid at ¥217.1 billion (up ¥4.3 billion), while investing cash flow used ¥173.0 billion, including ¥129.2 billion for the Transcend intangible assets. Financing activities used ¥114.3 billion, reflecting ¥29.9 billion in share buybacks, ¥30.0 billion in bond repayments, and ¥38.8 billion in dividends. Cash and equivalents decreased by ¥65.0 billion to ¥469.5 billion. Otsuka raised its interim dividend to ¥100 per share (from ¥70), with a full-year forecast of ¥200 (up from ¥140 the prior year), and completed a share repurchase of approximately 5.3 million shares for ¥30.0 billion, underscoring its commitment to shareholder returns.

Following the strong first half, Otsuka raised its full-year consolidated forecasts. The main drivers are continued momentum from Rexulti and Lonsurf, along with the newly launched Voyzact, plus a weaker yen. Selling, general and administrative expenses and R&D costs will rise due to the earlier US launch of ADHD drug Centyriant and expanded development of TSND-201, but ongoing cost efficiencies are expected to counterbalance. The revised exchange rate assumptions are ¥158/USD (previously ¥150) and ¥185/EUR (previously ¥175). However, the company cautions about uncertainties including Middle East tensions and US drug pricing and tariff policies.

In June 2026, Otsuka Pharmaceutical completed the acquisition of US-based Transcend Therapeutics Inc., becoming a wholly owned subsidiary, for a total consideration of up to $1,225 million (approximately ¥190 billion). The deal brings TSND-201, a rapid-acting neuroplastogen with the active ingredient methylone, into Otsuka’s pipeline for post-traumatic stress disorder. TSND-201 entered Phase III trials in April 2026 and offers a novel mechanism promoting neuroplasticity, distinct from traditional antidepressants, addressing significant unmet needs in PTSD. Of the acquisition price, roughly ¥114.5 billion was allocated to in-process R&D intangible assets, with additional milestone payments of up to $525 million tied to future sales. While this strengthens Otsuka’s neuropsychiatry pipeline, the success of the development program and return on investment remain key focal points.

R&D expenses for the interim period totaled ¥172.1 billion, up 5.7% year on year, with ¥163.0 billion spent in the medical business alone. Otsuka focuses on psychiatry/neurology, oncology, immunology, and rare diseases. Notable progress includes: US and EU approvals for acute myeloid leukemia drug INQOVI, China approval for IgA nephropathy treatment VOYXACT, and European approval for hereditary angioedema drug Dawnzera. New clinical trials were initiated for the ADHD drug centanafadine (EB-1020) in China (Phase II/III), zimberelimab plus futibatinib for biliary tract cancer, and casdatifan for renal cell carcinoma in Japan (Phase III). Meanwhile, development of OPC-214870 for epilepsy and ulotaront for major depressive disorder was strategically discontinued. Capital expenditure on property, plant, and equipment was ¥44.9 billion, while intangible asset acquisitions totaled ¥129.2 billion, mostly for Transcend. Otsuka continues to invest proactively in both R&D and capacity expansion across its pharmaceutical and nutraceutical/consumer businesses to secure mid- to long-term competitiveness.

Despite the strong performance, Otsuka recognizes several risks:

• Foreign exchange risk: A high proportion of overseas sales means a sharp yen appreciation would hurt earnings.
• Drug pricing and reimbursement risk: Pricing pressure in the US and Japan could squeeze margins.
• Patent expirations and generic entry risk: The loss of exclusivity for Samsca/Jinarc illustrates the impact of the patent cliff, underscoring the need for a robust pipeline.
• R&D uncertainty: New drug candidates may fail to gain approval or achieve expected sales; TSND-201 is still in Phase III with uncertain success probability.
• Geopolitical and trade risk: Deterioration in the Middle East or US tariff policies could affect supply chains and the business environment.
• Intensifying competition: In CNS and oncology, many competitors require differentiation and market share defense.

To address these, Otsuka aims to maximize its two core products plus new launches, invest in new businesses, and restructure costs in existing operations to drive sustainable growth.