■Taiko Pharmaceutical ＜4574＞ Topics

1. Pharmaceutical business: Supply capacity expansion and price increases are progressing smoothly

The external environment for the pharmaceutical business is good. The domestic antidiarrheal market is moving above the level before the COVID-19 pandemic due to increased opportunities to go out and inbound demand. The company's stable supply was the key to market share expansion, but the strengthening of the shift production system at the Suita Plant and Oguni Plant, where preparations have been underway until now, and the launch of a packaging line for “Seirogan Sugar Coated A” at the Kyoto Plant were completed in the first half of the 2024/12 fiscal year. As a result, shipments of the main “100 Seirou Maru tablets” and “Seirogan Sugar-coated A36 tablets,” which had been forced to be restricted due to lack of supply, have recovered. It is expected that 84 tablets of “Seirogan Sugar-coated A” and 24 portable tablets will also be shipped after the second half of the 2024/12 fiscal year, and supply is expected to improve further.

In 2024/5, shipping price revisions for “Seiromaru” and “Seirogan Sugar-Coated A” were implemented. In order to build a stable pharmaceutical quality system from the viewpoint of energy prices, raw material prices, logistics costs, exchange rate effects (depreciation of yen), etc., it will be the first price increase in about 20 years. There was no market turmoil, including consumers and distribution companies, and it seems that it was smoothly accepted, and prospects were made to secure sustainable profits over the medium to long term.

“Seiromaru Quick C,” which increased its performance due to successful marketing measures such as package renewal in the 2023/12 fiscal year, maintained strong sales even in the 2024/12 fiscal year. Also, it seems that the company was able to respond to the policy of developing videos tailored to various situations such as “student life” and “tourists visiting Japan” carried out in the summer of 2024 on SNS such as YouTube and Instagram.

2. Pharmaceutical business: decided to reorganize the production system

The company planned to gradually consolidate the production system of the pharmaceutical business from the existing Suita Plant to the Kyoto Plant, but based on the medium-term demand outlook, as a result of comprehensively considering BCP (business continuity) viewpoints, overseas regulatory affairs response policies (license maintenance, etc.), production scalability, etc., after investing in measures against aging at the Suita Plant, they decided on a policy to continue certain production in the future and establish a two-plant system. Based on this decision, part of the production equipment at the Kyoto Plant will be relocated to the Suita Plant, and since part will be removed, it is said that approximately 230 million yen will be recorded as an impairment loss after the 3rd quarter of the 2024/12 fiscal year.

3. Infection control business: Preparing marketing using digital media for families of examinees

Based on the fact that sales predictions in the sterilization market have continued to be difficult since the COVID-19 pandemic, cost control will be strengthened for the 2024/12 fiscal year, and marketing expenses will be invested according to the scale of sales. Then, we will prioritize R&D (establishment of JSA standards, evidence acquisition, etc.) related to strengthening evidence to restore trust in “Kleverin.” Over-the-counter sales of the stationary type, which is the main item of “Clevelin,” were 102% compared to the same period last year from January to June 2024, and there were signs of bottoming out. For the winter season, which is the demand period, marketing is being prepared by focusing on families of examinees whose awareness of sterilization has greatly increased due to the COVID-19 pandemic. In addition to video distribution for the exam season, it is planned to implement measures tailored to the target, such as promoting trust and EC strengthening measures through introduction on various digital media.

(Written by FISCO Visiting Analyst Hideo Kakuta)