FY2017, ending March 2018, H1...
Transcript of FY2017, ending March 2018, H1...
November, 2017
FY2017, ending March 2018,
H1 Presentation
2019
FY2017 H1 Overview
Copyright 2016 Nichi-Iko Pharmaceutical Co., Ltd. P,1
Sales
Operating Profit
Quarterly Net Profit
94.2 4.9 2.4
(+) Contribution of Sagent’s performance (-) Slow down in domestic GE market growth (-) Decrease in revenue from long listed products and others
(+) Sagent’s highly profitable products contribution (+) Progress of the Profit Management Plan (-) Impact of a slow down in domestic market
(-) 2.9 billion yen of impairment loss related to intangible assets of Sagent
19 consecutive FYs of increase in revenues for each H1 (The largest increase achieved this year)
Despite a slow down in Japanese market growth, Sagent sustained a stable result from Q1
(the same pd. last year : 75.1 bn yen)
(the same pd. last year : 2.1 bn yen)
(the same pd. last year : 4 bn yen)
FY2017 Financial Results by Segments
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Japan (MM yen)
Consolidated (MM yen)
Overseas (MM yen)
Adjustment (MM yen)
FY2016 H1
FY2017 H1 YOY FY2016
H1 FY2017
H1 YOY FY2016 H1
FY2017 H1
FY2017 H1 YOY
Sales 75,151 75,424 100.4% - 18,873 - - 75,151 94,297 125.5%
COGS 47,870 48,922 102.2% - 13,298 - - 47,870 62,221 130.0%vs Sales 63.7% 64.9% 70.5% 63.7% 66.0%
Gross Profit 27,289 26,340 96.5% - 5,574 - - 27,289 31,914 116.9%vs Sales 36.3% 34.9% 29.5% 36.3% 33.8%
SG&A 23,249 22,905 98.5% - 4,092 -
△
6 23,249 26,992 116.1%vs Sales 30.9% 30.4% 21.7% 30.9% 28.6%
R&D expense 3,516 3,008 85.6% - 858 - - 3,516 3,866 110.0%
Sales Promotion 10,008 10,460 104.5% - 179 - - 10,008 10,639 106.3%
Lobor expense 3,137 3,235 103.1% - 1,910 - - 3,137 5,145 164.0%
Depreciation 486 579 119.1% - 207 - - 486 786 161.7%
Amortization 86 1,076 1251.2% - 0 - - 86 1,076 1251.2%
Other 6,016 4,547 75.6% - 938 -
△
6 6,016 5,480 91.1%
Operating Profit 4,039 3,434 85.0% - 1,481 - 6 4,039 4,922 121.9%vs Sales 5.4% 4.6% 7.8% 5.4% 5.2%
Revenue change and impact factors analysis
Copyright 2016 Nichi-Iko Pharmaceutical Co., Ltd.
75,151
94,297
(Unit:MM yen)
P,3
FY2016 H1
FY2017 H1
Sagent
Other (Japan)
LLP
GE
△722
+18,873
+1,635
△640
Operating Income change and impact factors analysis
Copyright 2016 Nichi-Iko Pharmaceutical Co., Ltd.
△350
+367
4,039
4,922
+4,625
(Unit:MM yen)
P,4
△1,120
△2,008
FY2016 H1
Gross Profit increase
Labor expense increase
Sales promotion increase
R&D expense increase
Sagent Depreciation & Amortization FY2017 H1
Other SG&A
△631
Market Conditions and Progress of Pipeline Developments
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FY2017 FY2018 FY2019 Total # of Launches *parenthesis: # of launched products
14 (8)* 17 12 43
FDA Accelerating
Approvals
Market attracting
more competitors
GPO
consolidation
• In 2016, ANDA approvals increased by 35% vs 2015
• FDA accelerating approvals of products with limited
competition
• Low cost Indian companies are building commercial
capabilities
• Greater number of competitors in 1 product
• 4 players control market access
• Greater number of products contracted on “private
label”
1. Existing GE market facing greater
price declines
2. Erosion on products losing exclusivity
occurring more quickly
3. Low cost players erode price
U.S. Injectable Market
To survive the competitive market, even stronger pipeline profile is needed
The Market becoming even more competitive
To achieve faster and earlier approvals & cost efficiency in the developments, considering to relocate the development projects to Omega, our Canadian subsidiary
Extraordinary Loss △2.9bn yen
Reversal of Deferred +0.8bn yenImpact to Net profit △2.1bn yendue to impairment
Sagent Goodwill and Intangible Assets Impairment Test
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In the 2Q of FY ending March 2018, Sagent was subject to goodwill and intangible assets impairment tests according to the US GAAP
Goodwill
Intangible assets
No impairment
IPR&D ¥2.9bn impairment
Deferred Tax Liabilities
¥0.8bn reversal due to decrease in fair value of
intangible assets
Net Income reduced by 2.1 bn yen attributable to the impairment
• Delayed approvals attributable to suppliers/partners
• Less bullish sales compared to the initial forecast. Intensifying competition.
• Patent related issues • Delayed responses to FDA
Factors for the impairment loss
Impacts on Net Income
(△$26.8m)
(+$7.2m)
(△$19.6m)
Fair Value reduced to 0 3 products $2.2m
Fair Value reduced partially 19 products $24.6m
Total 22 products $26.8m
Reversal of deferred tax liabilities
Trade Name under
Manufacturing and Marketing Authorization Holder Marketing and Distribution by
Nichi-Iko
Ayumi Yakuhan Pharmaceutical Co., Ltd.
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Infliximab Biosimilar(BS) September 27, 2017
Approvals for Infliximab BS for I.V. 100mg “Nichi-Iko” and “Ayumi” (2 trade names)
(A Wholly-Owned subsidiary by Nichi-Iko)
Planned Launches in late Nov, 2017 Tagged with the partner having strength in Specialty area to maximize the sales opportunity
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Progress of Biosimilar Development
Infliximab (Remicade®)
Currently in Phase3 aiming to obtain an Interchangeability approval, the first in the US market
Trastuzumab (Herceptin®)
FY2018/3:Planned to begin Phase1 in the US
FY2020/3:Planned to begin Phase 3 at global sites, which would be Japan, the US and Europe
Considering additional BS development partnering with Aprogen and/or other new partners
2021/3 Approval
(plan)
2019 application
Trastuzumab (Herceptin®) 2022/3
Approval (plan)
Infliximab (Remicade®)
Launch in 2017
JPN
USA
JPN
USA In 2020/3,
Commence the global Phase3
Phase3 In progress
Europe
Investment to SterRx
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Company Name:SterRx, LLC Address:Plattsburgh NY, USA Area of Business:FDA compliant 503B Compound Drug manufacturing
September 2017 Sagent invested SterRx to become a 25% share holder, making SterRx an equity method affiliate company
Compound Drug (CD) CDs are the drugs dispensed by pharmacists with
changes to the preparations such as drugs concentrations adjustments, exclusion of additives, and changes in formulation in order to meet special needs by individual patients. Current compounding practices in the US are generally limited to drugs for patients with difficulties pertaining to the formulation or other characteristics of marketed products. CD do not require a FDA approval for each product.
FDA regulation 503B
503B stipulates rules for CD manufacturers in order to run a mass production in FDA registered strictly cGMP compliant facilities and market as such produced CDs WITHOUT prescriptions to particular patients. The 503B compliant facilities can also produce shortage list drugs.
Market for the CD Current market size is approx. 3 to 4 bn USD
From 2015, the market’s annual grown rate has been 5.7%
The growth estimated to reach the size of 4.8 bn USD by 2021
Current competitors are mostly family owned size local companies
SterRx Strengths Acquired Wyeth(Current Pfizer)facility in 2013
Fully automated line, sterile environment secured Capability of vial, ophthalmic solution, bag, syringe
productions The largest capability among the US competitors(1.5 MM units/year)
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Market in South East Asia
(出典)Business Monitor International Aug.2014
Total of the ASEAN 5 countries (Thailand, Vietnam, Philippine, Malaysia, Singapore)
Originator market size 483 bn yen
GE market size 724.5 bn yen
Nichi-Iko’s Approved products in the SEA market 6 products
Products Developments in place 60 products
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Yield Rates improvement Reduction of lead time
Enhance procurement management
Optimize inventory management
Improved profitability by approx. 1.5 bn yen in H1 2018/3
Cost of Production
Productivity
‘Work Style’ reforms
Revisit operation processes
No overtime work
IT solution
The result exceeded the initial H1 target
Profit Management Plan 2019
Production Facilities(Automated Manufacturing System)
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“Premium Quality” path for an Automated Manufacturing
Cost reduction Premium Quality
Stable supply
Changes in business environment
Concerns of securing human resources in
future Next Step
Challenges
Automation AI implementation
Strategy
21 bn Premium Quality tablets supply
(Planned to achieve the above production capability by FY2021/3)
Expected Results
Outsourcing
Shizuoka Plant Toyama Plant
FY2015 FY2016 FY2017 FY2018 FY2019 FY2020
Consolidated Overseas Consolidated Overseas Consolidated Overseas
Sales 163,372 12,148 94,297 18,873 200,000 43,800 122.4%
Gross Profit 56,741 2,839 31,914 5,574 66,000 11,500 116.3%
SG&A 48,186 2,789 26,992 4,092 57,000 9,600 118.3%
Operating Profit 8,554 50 4,922 1,481 9,000 1,900 105.2%
Ordinary Profit 8,411 5,103 8,600 102.2%
Attributable to Parent 114.9%Quarterly Net Profit
4,788 2,449 5,500
FY2016 FY2017Full Year Actual H1 Actual Full Year Forecast
YOY
FY ending March 2018 Full Year Forecast
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(Unit:MM yen)
No change to Net Income forecast
Annual Dividend (tentative)
30.0yen
CAPEX 11 bn yen
R&D 10 bn yen
D&A(incl. goodwill)
10.5 bn yen(initial plan) 10.6 bn yen(initial plan) 10.9 bn yen(initial plan)
11 bn yen
The information contained in this document is not intended as solicitation material for buying or
selling the company’s shares.
Earnings forecasts and other future forecasts contained herein have been made by the
company based on information available at the time the material was compiled and encompass
potential risks and uncertainties.
Accordingly, actual results may differ from forecasts for a variety of reasons.
The company and any other information sources for this document bear no responsibility for
damages or losses resulting from the use of this information.
Forward-Looking Statements
Contact information for any questions: Nichi-Iko Pharmaceutical Co., Ltd. Corporate Planning Office Phone: +81-76-442-7026 E-mail: [email protected]