A Message from the President

Hiroshi NomuraHiroshi NomuraRepresentative Director,
President and CEO

First, before we report the summary of our Group’s business results for the second quarter of the fiscal year ending March 31, 2020 (April 1, 2019 to September 30, 2019), we would like to take this opportunity to express our sincere gratitude to all investors for their understanding and kind support for our business.

The second quarter of the fiscal year ending March 31, 2020 saw a drop in revenue in Japan under the strong influence of the decline in sales of long-listed products. In the U.S., on the other hand, revenue increased as sales of the atypical antipsychotic agent LATUDA®, one of the primary revenue sources of the Group, showed growth, while revenue in China also increased. As a result, the Group’s consolidated revenue was 230.6 billion yen (up 4.4 billion yen year-on-year) and core operating profit was 44.8 billion yen (up 7.6 billion yen year-on-year).
A review of business plans in the oncology area resulted in a decrease in fair value of contingent consideration for acquisition and then led to a reversal of expenses, but in addition to recording impairment losses on in-process research and development, an intangible asset, we recorded exchange losses and an increase in income taxes. As a result, net profit attributable to owners of the parent was 30.3 billion yen (up 2.5 billion yen year-on-year).
With regard to the consolidated financial forecasts for the entire fiscal year ending March 31, 2020, we are anticipating revenue of 475.0 billion yen (up 15.7 billion yen year-on-year), core operating profit of 77.0 billion yen (down 0.3 billion yen year-on-year), and net profit attributable to owners of the parent of 36.0 billion yen (down 12.6 billion yen year-on-year).

In terms of progress on research and development, in the area of Psychiatry & Neurology in Japan we have obtained approval for schizophrenia of the transdermal patch formulation of atypical antipsychotic LONASEN® Tape, and submitted a new drug application for schizophrenia and bipolar depression of lurasidone (branded in the U.S. as LATUDA®). In the U.S., we have begun Phase 3 studies on SEP-363856 for schizophrenia, which we expect to scale up as a successor to LATUDA®. Our new drug application for the dopamine and norepinephrine reuptake inhibitor (DNRI) dasotraline for the treatment of adults with moderate-to-severe binge eating disorder (BED) was accepted by the U.S. Food and Drug Administration (FDA).
In the area of Oncology, as a result of interim analysis in two global clinical studies of napabucasin in the United States, Japan and elsewhere, we discontinued the Phase 3 study for pancreatic cancer, but are continuing with the Phase 3 study for colorectal cancer.
In October 2019, we signed a definitive agreement for a Strategic Alliance with Roivant Sciences Ltd. This strategic alliance is expected not only to furnish us with growth engines for the era after expiration of U.S. market exclusivity of LATUDA®, but also to contribute greatly to the establishment of our position as a “Global Specialized Player,” which we aspire to be in 2033.
(For further details, please see the news release on the strategic alliance with Roivant Sciences, issued October 31, 2019.)

With regard to dividends for the fiscal year ending March 31, 2020, we are planning to pay an interim ordinary dividend of 14 yen per share. We also plan an ordinary dividend of 14 yen per share for year-end dividend, making a total annual dividend of 28 yen per share (consolidated payout ratio: 30.9%).

We continue to enhance our company’s value through persistent efforts to advance our business to respond to the faith of all of our shareholders. Your continued support is greatly appreciated.

November 2019