OTC and Skin Care Medicines Q2 FY2026: Rohto leads as Kobayashi profit slumps

The key difference between the two companies was profit growth, not whether sales increased. Kobayashi reported interim results, while Rohto reported first-quarter results, making their sales and profit totals difficult to compare directly.

• Rohto lifted sales 11.8% from a year earlier, supported by domestic skin care and eye care, as well as growth in Asia and Europe.
• Kobayashi also posted higher sales, up 2.5%. But the red yeast rice issue continued to weigh, sending operating profit down 67.5%.
• Higher selling, general and administrative expenses also affected earnings. Rohto absorbed rising advertising and personnel costs, while Kobayashi's profit decline was much steeper.
• Overseas market growth is a tailwind, but differences in growth regions and investment burdens are shaping each company's earnings.

Rohto was the strongest performer. Sales reached 91.6 billion yen, up 11.8%, while operating profit rose 16.8% to 13.7 billion yen. Its operating margin was 14.9%.

Kobayashi struggled most. Interim sales increased 2.5% to 70.7 billion yen, but operating profit fell 67.5% to 2.2 billion yen, leaving a margin of just 3.1%. A year earlier, before the red yeast rice issue came to light, operating profit was about 6.6 billion yen. The comparison with that period, along with higher SG&A expenses, drove the decline.

Rohto's net profit also fell, down 9.5%, mainly because of the reversal of a large dividend received the previous year. Kobayashi's net profit dropped 64.1%, reflecting a sharper deterioration in its core business.

Rohto raised its full-year outlook as it captured overseas growth. It now forecasts full-year sales of 372.3 billion yen and operating profit of 45 billion yen. Europe recovered from problems a year earlier, while Asia also contributed to performance.

Kobayashi grew overseas sales, led by China, but advertising investment widened losses in its international business. The spending is intended to support future growth, though the path to an earnings recovery remains uncertain. The sale of Jiangsu Kobayashi Pharmaceutical is also drawing attention as part of the company's portfolio review.

For the full year, Kobayashi expects extraordinary gains, including a profit from the sale of PALTAC shares. It forecasts net profit of 10 billion yen, up 173.5% from the previous year. Such one-off gains should be considered separately from a recovery in operating profit.

On the reported figures, Rohto ranked higher in both sales and operating profit. The operating margin gap was also wide: 14.9% at Rohto versus 3.1% at Kobayashi.

However, Rohto's figures cover three months, while Kobayashi's cover six. Investors should not use the ranking by reported amounts alone to judge company scale or relative performance. Sales growth, margins and each company's year-on-year results also matter. Any industry average presented should likewise be treated as a simple average of the two companies.

Even with the different reporting periods, the contrast is clear: Rohto grew sales and operating profit, while Kobayashi recorded a steep profit decline. The ability to turn overseas growth into earnings shaped the divergent results.

The two companies face these risks in different ways, but several issues warrant attention across the sector.

• Regulation and trust: Quality problems involving medicines and health-related products can have a lasting effect on sales and brands.
• Rising advertising and personnel costs: As competition intensifies, higher sales may not translate into stronger profits.
• Uncertainty in overseas business: Regulatory changes and shifting competitive conditions in individual markets can prevent growth investments from generating returns.
• Earnings volatility from one-off factors: Share-sale gains or the reversal of dividend income can make net profit a poor reflection of core performance.

Those seeking work in a growth market may want to look at Rohto, which is expanding overseas. Its growth in Asia and Europe could create opportunities in product development and international sales. The company will also need to sustain growth while managing advertising and personnel costs.

At Kobayashi, restoring trust and reviewing the business are major priorities. Roles in quality control, crisis response and reviving existing products are gaining importance. Job seekers should assess not only financial performance, but also operational improvements and the company's investment priorities.