Otsuka: Lifts H1 Net Profit Forecast 68% on Strong Drug Sales, Cost Cuts
Otsuka Holdings (4578) on the 28th raised its first-half FY2026 net profit forecast by 68% to ¥215 billion, marking a record high. The upgrade was fueled by brisk sales of mainstay drugs, a weaker yen, and restrained R&D expenses.
Breakdown of the Upward Revision
Under the revised forecast, revenue is now seen at ¥1,332,000 million, up ¥114,000 million (9.4%) from the previous forecast of ¥1,218,000 million. Operating profit is projected to jump 61.8% to ¥280,000 million, and business profit to rise 58.9% to ¥278,000 million. Parent-attributable interim net profit reaches ¥215,000 million, 23.9% above the prior-year result of ¥173,529 million.
| Item | Previous Forecast (¥mn) | Revised Forecast (¥mn) | Change |
|---|---|---|---|
| Revenue | 1,218,000 | 1,332,000 | +9.4% |
| Business Profit | 173,000 | 280,000 | +61.8% |
| Operating Profit | 175,000 | 278,000 | +58.9% |
| Interim Net Profit | 131,000 | 218,000 | +66.4% |
| Parent-Attributable Interim Net Profit | 128,000 | 215,000 | +68.0% |
The upward revision reflects the yen's depreciation and expanded sales of key products, and the company hinted that full-year forecasts may also be raised.
Drivers: Growth of Mainstay Products and R&D Cost Restraint
The revision was attributed to stronger-than-planned sales of key medical products such as the anti-APRIL antibody 'Voyzact', antipsychotic 'Rexulti', and antineoplastic agent 'Lonsurf'. Additionally, delayed generic entry for the U.S. product 'Jynarque' and the European 'Abilify Maintena' also boosted profits. Currency effects were favorable, with the weaker yen against the dollar and euro adding roughly 9.4% to revenue.
On the expense side, R&D costs are expected to fall below plan due to the discontinuation of some indications for ulotaront and project timeline delays. As a result, profit margins improved significantly, delivering earnings well above both the prior-year results and the original forecasts.
Outlook: Full-Year Forecast and Development Strategy
Full-year FY2026 guidance will be disclosed on July 31 at the earnings announcement. Following this sharp interim upgrade, a full-year upward revision is widely expected. However, attention will be on the sustainability of R&D cost restraint. The partial discontinuation of ulotaront development provides a temporary cost reduction, but the impact on pipeline value also warrants scrutiny.
Yen weakness is likely to persist in the second half, potentially providing further upside depending on exchange rate assumptions. While patent expirations on key drugs remain a medium-term growth headwind, the company needs growth strategies through new product launches and partnerships. The market is focused on next-generation pipeline developments and the quality of earnings.
Analyst take
While strong product sales and a weaker yen provided a boost, the revision was also heavily influenced by postponed R&D spending, which leaves some uncertainty over the quality of earnings. A full-year upgrade looks certain, but further upside hinges on R&D trends and forex. Patent cliffs for major drugs remain a key risk.