IHS Global Insight Perspective | |
Significance | In fiscal year 2009/10, Pariet's revenue dampened Eisai's sales growth despite increases observed in sales of Aricept and oncology products. Largely due to the in-process R&D expenses recorded related to AkaRx's acquisition, the company's operating and net incomes slipped by 5.7% and 15.4% y/y respectively. |
Implications | During the same period, Japan and China continued to be the company's growth markets, while other overseas markets' performance suffered decreases attributed to factors including the Japanese yen's appreciation. |
Outlook | Looking ahead, the company expects the oncology portfolio to continue its growth. A range of new launches, including Zebinix in some European countries, is also set to bolster top-line growth. |
Japan's fourth largest drug maker Eisai today announced a slight 2.7% year-on-year (y/y) increase in its net sales, which stood at ¥803.2 billion (US$8.7 billion), in the fiscal year (FY) 2009/10 ended 31 March 2010. During this period, the company's net sales in its domestic market went up 8.2% y/y to ¥359.7 billion, however, the increase was offset by the decline in overseas markets including the United States, Europe as well as Asia except Japan and China. A robust y/y jump of 37.2% was observed in the company's product sales in the Chinese market thanks to the steady rise in sales of the company's top-selling drugs, Aricept and Pariet.
During the said fiscal year, Eisai recorded ¥23.9 billion in-process R&D expenses associated with events including the acquisition of AkaRx, which prompted the R&D spend up by 14.7% y/y to ¥179.1 billion. This expenditure surge was among the factors that led to the decline in the company's operating and net profits in FY 2009/10. Its net income, in particular, suffered a 15.4% y/y slump to ¥40.3 billion.
Eisai: Selected Results, FY 2009/10 | ||
| ¥ bil. | % Change Y/Y |
Net Sales | 803.2 | 2.7 |
Cost of Sales | 160.7 | 5.5 |
Sales, General and Administrative Expenses | 376.9 | -1.2 |
R&D Expenditure | 179.1 | 14.7 |
R&D as % of Sales | 22.3 | 2.3 pp higher |
Operating Margin** (%) | 10.8 | 0.9 pp lower |
Operating Income* | 86.5 | -5.7 |
Net Income | 40.3 | -15.4 |
Source: Eisai, IHS Global Insight | ||
Looking at the sales of Eisai's key products, best-selling Alzheimer's disease treatment Aricept (donepezil) maintained a sound sales growth of 6.3% y/y to ¥322.8 billion. The growth was mainly contributed to by sales in Japan, United States and China while sales in Europe and ex-Japan/China Asian markets experienced declines. The company's oncology products, namely Aloxi and Dacogen, have averted the slip observed in previous quarters and registered 5% and 2.3% y/y sales increases to ¥38.3 billion and ¥15.4 billion respectively. In addition, anti-epileptic treatment Zonegran continued to see sales increase especially in the European markets. By contrast, the company's second best-selling drug Pariet/Aciphex's (rabeprazole) sales went down 7.4% to ¥148 billion largely due to the 20% y/y decrease in the U.S. market.
Eisai: Selective Product Sales, FY 2009/10 | ||
| ¥ bil. | % Change Y/Y |
Aricept | 322.8 | 6.3 |
Japan | 93.6 | 19.6 |
United States | 194.7 | 2.7 |
Europe | 27.9 | -3.2 |
China | 1.4 | 52.6 |
Asia (exc. Japan, China) | 5.3 | -14.9 |
Pariet/Aciphex | 148.0 | -7.4 |
Japan | 53.8 | 20.7 |
United States | 81.0 | -20.0 |
Europe | 8.2 | -19.8 |
China | 1.1 | 66.7 |
Asia (exc. Japan, China) | 3.9 | -8.7 |
Methycobal | 39.8 | 0.6 |
Aloxi | 38.3 | 5.0 |
Dacogen | 15.4 | 2.3 |
Zonegran | 6.5 | 7.7 |
Source: Eisai | ||
Outlook and Implications
Eisai: Financial Outlook for FY 2010/11 | |||
| Net Sales | Operating Income | Net Income |
¥ bil. | 810 | 105 | 65 |
Y/Y Change (%) | 0.9 | 21.5 | 61.1 |
Source: Eisai | |||
For FY 2010/11, Eisai expects to see net sales up by 0.9% y/y to ¥810 billion after the downward impact of Aricept's loss of exclusivity in the United States and Japan's biennial price cut was offset by continued growth in Japan and China. The oncology portfolio is expected to keep contribution to top-line growth as well during the same period. In terms of profitability, Eisai forecasts its operating profit and net profit shot up by 21.5% and 61.1% respectively to ¥105 billion and ¥65 billion largely due to no in-process R&D expenses expecting to be recorded in FY 2010/11. The company is also poised to beef up its overseas presence by the establishment of the new subsidiary in Canada. The Canadian market growth following this move is then set to prompt the company's performance in North America, where sales in the United States have suffered a decline. Meanwhile, the company is also aiming to enhance its presence in the fast-growing Chinese market, where it has bagged Spanish firm Almirall's indigestion treatment cinitapride through a licensing deal inked in April (see Japan - China - Spain: 16 April 2010: Eisai, Almirall Tie Up in Cinitapride Development, Marketing in China).
On the other hand, the company has also lined up new products as potential growth drivers including the anti-epileptic agent Zebinix's roll-out in four European countries, sedative-hypnotic agent Lusedra in the United States, as well as chronic hepatitis B treatment Revovir in the Philippines (see Japan: 3 December 2009: Eisai Expands Sales of Anti-Epilepsy Drug Zebinix in EU Markets). In its domestic market, the approval for Humira's indication of psoriasis treatment is also going to bolster the product's overall revenue. In the longer term, the company also holds a strong candidate as a potential next blockbuster, oncology agent Eribulin has been filed simultaneously in Japan, the United States and Europe in March 2010 (see Japan: 31 March 2010: Eisai's Breast Cancer Drug Eribulin Poised for Commercialisation in Japan, U.S., and EU with Simultaneous Marketing Applications). If the drug's regulatory applications in these key markets can go smoothly, it is likely to become a leading product in the company's oncology portfolio and increase the weight of oncology products in Eisai's overall portfolio.