Japan's Big Pharma FY2026 Full Year: Chugai leads on margins as growth diverges

The nine companies' sales rose an average of 7.7% year on year on a simple-average basis. Eight reported growth, with Shionogi leading at 14.0%. Takeda, by contrast, recorded a 1.7% decline as generic competition for Vyvanse weighed on sales.

Profit growth rates alone do not tell the full story. Astellas' operating profit surged 832.4%, partly because it no longer faced the large impairment charge recorded a year earlier. Daiichi Sankyo's operating profit fell 31.0%, but core operating profit increased 15.1%.

• Portfolio shifts toward newer drugs are advancing. Growth in products such as PADCEV and Enhertu supported higher sales.
• Patent expirations remain a headwind. At Takeda, falling Vyvanse sales weighed on its neuroscience business.
• One-off items affected earnings. Smaller impairment losses and asset-sale gains lifted operating profit at several companies.
• Overseas sales and foreign exchange also provided support. Kyowa Kirin's overseas sales share rose to 74%, helping offset domestic drug-price revisions.

The companies report on different fiscal calendars, with fiscal years ending in December 2025 or March 2026. Operating-profit definitions and one-off items also vary, so direct comparisons require caution.

Chugai stood out for profitability. Sales rose 7.5% to ¥1.2579 trillion, while operating profit gained 10.5% to ¥598.8 billion. Its 47.6% operating margin was far above the nine-company average of 20.9%. Hemlibra exports and new products supported earnings.

At the other end, Eisai faced the greatest pressure on profits. Sales grew 4.6% to ¥825.4 billion, but operating profit fell 18.8% to ¥44.1 billion. Its 5.3% margin was the lowest among the nine. Investment to expand Leqembi and restructuring costs weighed on earnings.

This period also showed that sales growth alone does not decide the winners and losers. Shionogi increased sales 14.0% and posted a 33.4% margin. Sumitomo Pharma's operating profit surged 272.6%, though the result also included one-off factors such as gains from business transfers.

Takeda reported a 1.7% sales decline but a 77.7% increase in net profit. Cost efficiencies and a smaller impairment loss supported earnings. Sales of growth and new products also rose 5.1% as the company advances its portfolio transition.

Astellas grew sales 11.9% to more than ¥2 trillion. PADCEV and VYLOY drove growth, and its operating margin was 17.9%. However, the sharp rise in operating profit also reflected the absence of impairment charges recorded a year earlier.

Daiichi Sankyo increased sales 12.6%, with growth in products including Enhertu. Operating profit fell 31.0% due to compensation for losses at a contract manufacturer, while core operating profit rose 15.1%. Its plan to sell its over-the-counter medicine business also signals a focus on oncology.

Otsuka grew sales 6.0% and business profit 3.6%. Gains from share sales also contributed to a 48.2% increase in operating profit. The company is investing in new products and technologies ahead of patent expirations.

Kyowa Kirin managed sales growth of just 0.3%, but core operating profit rose 8.1%. Overseas growth in Crysvita and cost management provided support. Overseas sales accounted for 74% of the total.

Shionogi increased sales 14.0%, setting a record for the fourth consecutive fiscal year. It is expanding its business through moves including the transfer of JT's pharmaceutical operations. Net profit, however, also included a negative goodwill gain.

Sumitomo Pharma grew sales 13.7% and operating profit 272.6%. Its three main North American products gained ground, while business-transfer gains also boosted profit. For the next fiscal year, it forecasts sales of ¥540 billion and operating profit of ¥90 billion.

Eisai increased sales of Leqembi to ¥8.8 billion. Spending on future growth came first, and operating profit declined. For the next fiscal year, it forecasts sales of ¥883.5 billion and operating profit of ¥70 billion.

Chugai is drawing on Roche's sales network and its own drug-discovery technology. It led the group in operating margin, while core operating profit rose 12.1%. The focus is on whether it can sustain research and development while growing high-margin products.

Even when growth drugs sell well, patents, drug pricing and development costs can alter profitability. Investors should look beyond sales to the quality and sources of earnings.

• Generic competition after patent expirations can cause sharp declines in sales of key drugs.
• If clinical trials or regulatory approvals for new drugs do not proceed as expected, companies may fail to recoup research and development spending.
• Drug-price revisions and price controls in various countries can erode profitability even as sales volumes rise.
• Currency swings can boost overseas sales and export earnings, but become a headwind when exchange rates reverse.
• Manufacturing problems at external contractors or supply shortages can lead to lost sales opportunities and compensation costs.
• Reliance on asset-sale gains or the absence of impairment charges can make it harder to see whether underlying operations are improving.

Takeda led the group in sales at ¥4.5057 trillion. Chugai ranked first in operating profit at ¥598.8 billion, separating sales scale from earnings power. Shionogi and Sumitomo Pharma were among the leaders in sales growth, but the durability of growth excluding one-off factors remains a key question.

Job seekers and people considering a career move should look beyond company names to the businesses driving growth. Investment is increasing in priority fields such as oncology and Alzheimer's disease, broadening demand for talent in research and development, regulatory affairs, manufacturing and overseas operations.

At companies pursuing cost cuts or business restructuring, organizational changes may also follow. Looking at the product mix in a prospective team, overseas expansion and research priorities can help candidates understand the work they may be doing after joining.