TAIKO PHARMACEUTICAL CO.,LTD. Q2 FY2025 earnings call

Core Corporate Strategy

• The 2025 core strategy remains focused on building a profit base centered on the pharmaceutical business, with strengthening Seirogan's supply capacity as the top priority.
• Promotion of the pharmaceutical business led by Seirogan Candy Coating A will be enhanced to pursue market share expansion.
• For the infection control business, management is focused on pulling the segment out of its downward market trend and continuing to improve profitability.
• Overall half-year performance is broadly in line with plan, despite year-over-year revenue and profit decline.

Pharmaceutical Business Operational Updates

• The domestic antidiarrheal market grew 9.2% YoY, and Taiko Pharmaceutical's in-store sales outperformed the market at +16.2% YoY, maintaining a 48.2% market share despite Seirogan supply shortages.
• The Seirogan supply capacity increase project launched in January 2025 includes three core initiatives: boosting production capacity, strengthening the Suita factory, and relocating/updating production equipment. The equipment relocation from Kyoto Factory was completed on schedule at the end of July 2025.
• Management expects 30% higher Seirogan supply volume from spring 2026 after completing capacity investments and hiring increases in H2 2025.
• For overseas growth, Taiko will leverage its over 90% brand recognition in core Greater China markets (Hong Kong, Taiwan, South China) to expand product portfolios and geographic coverage across China.
• For domestic user expansion, management is shifting the Seirogan brand positioning from exclusively an antidiarrheal to a general gastrointestinal medicine, targeting the 94% of the population that currently does not use Seirogan for non-diarrheal stomach discomfort. It will communicate the product's benefits for food/water poisoning, loose stools, safety for children as young as 5, and safety for pregnant users (Seirogan Quick C).
• H2 2025 promotion for Seirogan Candy Coating A targets working women, focusing on portable SKUs for outings and full-size bottles for home use via SNS and digital media ahead of the summer travel season.

Infection Control Business Operational Updates

• The disinfection market has continued to shrink post-COVID, though the decline is leveling out; market outlook remains uncertain.
• H2 2025 initiatives center on leveraging the upcoming JSA standard for low-concentration chlorine dioxide gas products, which is Japan's first formal standard for measuring airborne virus reduction efficacy of chlorine dioxide products. Management expects the standard to improve industry credibility for chlorine dioxide disinfection products.
• After the standard is released, Taiko will update product packaging and advertising copy based on formal performance testing, and continue to communicate product efficacy based on scientific evidence.
• Taiko holds 92 patents globally for low-concentration chlorine dioxide products, and will leverage its 20 years of accumulated intellectual property to target market recovery and build out the commercial business segment.

1. Pharmaceutical Segment: Revenue of 2.206 billion yen, a 448 million yen year-over-year decrease driven by reduced Seirogan shipments. Segment profit is 601 million yen, with a segment profit margin of 27.2%. Within domestic products: Seirogan revenue is 867 million yen (26% YoY decrease due to supply constraints), Seirogan Candy Coating A revenue is 921 million yen (21% YoY increase after supply issues were resolved and new portable SKU launch), Seirogan Quick C revenue is 134 million yen (7.2% YoY increase). Overseas pharmaceutical revenue is 508 million yen, a 310 million yen YoY decrease due to manufacturing scheduling shipment adjustments, with China posting 226 million yen in revenue (62 million yen YoY increase) while Hong Kong and Taiwan saw lower year-over-year results. This segment accounts for 91.5% of total consolidated revenue.
2. Infection Control Segment: Revenue is almost flat year-over-year at 203 million yen. Overseas infection control revenue increased 5 million yen YoY to 21 million yen. The segment narrowed its net loss by 44 million yen to a 151 million yen segment loss, driven by non-marketing cost reduction despite higher advertising spending. This segment accounts for 8.4% of total consolidated revenue.
3. Other business: No separate financial results were disclosed in the transcript.

• Management maintains full-year revenue guidance matching prior year levels, with 2.15 billion yen in full-year pharmaceutical overseas revenue guidance maintained.
• A 287 million yen half-year revenue shortfall relative to plan is entirely attributable to overseas pharmaceutical shipment delays, which management expects to recover in the second half of the year.
• Seirogan supply volume is expected to increase approximately 30% after spring 2026, with gradual supply improvements starting in H2 2025.
• Full-year recovery of overseas pharmaceutical revenue to prior year levels is expected if shipments proceed as planned in H2 2025.

• Ongoing Seirogan supply shortages have resulted in a 463 million yen negative impact on H1 pharmaceutical revenue, and continued supply constraints could impact full-year performance if capacity expansion is delayed.
• The global disinfection market for infection control products remains uncertain after the post-COVID market decline, which may continue to pressure infection control segment results.
• Yen appreciation created a 20 million yen negative impact on H1 operating profit, and further yen strength could pressure overseas results going forward.
• Raw material and material price increases created a 147 million yen negative H1 cost impact, and continued inflation could pressure margins.

No question and answer section was included in the provided transcript.