9273.T

Financial Performance Overview

• Both segments grew, with the company achieving all-time record high revenue and profit for the 2025 June fiscal year. Total consolidated revenue hit 23.269 billion yen, up 5.1% year-over-year; operating profit hit 5.355 billion yen, up 22.2% year-over-year; net income hit 3.637 billion yen, up 23.5% year-over-year.

10-Year Long-Term Business Plan (to 2030 June fiscal year)

• Strategic positioning: Transition the API segment from a "bulk drug trading company" to a "specialized pharmaceutical trading company," and build the pharmaceutical product segment into a "leading domestic manufacturer of specialized injectable drugs."
• 2030 financial target: 40 billion yen total consolidated operating profit split equally between the two segments (4 billion yen operating profit per segment), with total consolidated revenue of 40 billion yen.

Medium-Term (2026-2028 June fiscal year) Strategic Growth

• API segment: Expand business beyond generics to include long-listed brands and authorized generics, pursue license-in activities for new modality drugs, and plan reconstruction of the Yokohama Pharmaceutical Analysis Center to expand testing capabilities.
• Pharmaceutical segment: Build out production capacity to meet growing demand for pre-filled syringes, driven by strong clinical recommendations for pre-filled syringes as an infection prevention measure in dialysis facilities. The company currently holds over 30% market share for its maxacalcitol pre-filled syringe product, but existing capacity is maxed out.
• Zao Second Factory construction is progressing on schedule: completion is targeted for June 2026, with regulatory approval, trial production, and full commercial launch targeted for July 2027; the company is working to accelerate launch by several months if possible.
• Facility role split: Zao First Factory will handle low-volume, multi-product pre-filled syringe and vial production for high-potency drugs; Zao Second Factory will handle high-volume, low-variety pre-filled syringe production; the main plant will handle tablet and injectable manufacturing. A full integrated CDMO (contract development and manufacturing organization) framework will be built across facilities, leveraging synergies between group companies to expand contract manufacturing and packaging services.

Quality and Sustainability

• The company maintains rigorous internal and external quality assurance and compliance audits, including unscheduled cross-group audits, specialized third-party compliance audits, and annual management training on quality importance. 6 regulatory audits and 31 customer audits were completed for the API segment, and 1 regulatory audit and 5 customer audits for the pharmaceutical segment in the prior fiscal year.
• Sustainability initiatives are led by a dedicated Sustainability Committee, with updated 2025 ESG data scheduled for public disclosure in September 2025.

Capital Allocation and Shareholder Returns

• The company follows a core policy of annual dividend increases as a general rule, targeting a payout ratio of 20% or higher. For the 2025 June fiscal year, the dividend was increased from 13 yen per share to 16 yen per share, in line with this policy. The company maintains a target ROE of 12% or higher, and follows a proactive cycle of investment, return on capital recovery, and shareholder return to drive sustained growth.

• 2026 June fiscal year: The company expects both segments to deliver revenue and profit growth, forecasting total consolidated revenue of 25.7 billion yen (up 10.4% year-over-year) and operating profit of 5.43 billion yen (up 1.4% year-over-year). A full-year dividend increase to 17 yen per share is projected.
• 2028 June fiscal year (after Zao Second Factory full launch): The company targets total consolidated revenue of 31.9 billion yen and operating profit of 6.53 billion yen. Planned capital expenditure is 2.699 billion yen for 2026 and 2.066 billion yen for 2028.
• The 12% or higher ROE target is maintained through the medium term.
• Management expects strong long-term growth after Zao Second Factory enters full operation in 2028, aligned with 10-year plan targets.

原薬セグメント (API Segment)

• Revenue grew year-over-year, driven by expanded sales of recently launched products and increased transaction volumes from the newly implemented selected healthcare system that boosted generic drug adoption. Sales of newer, higher-margin products grew strongly, outweighing declines in some existing product categories from customer inventory adjustments and generic competitor adoption. The segment achieved both revenue and profit growth for the full fiscal year.
• Gains were concentrated in central nervous system and oncology APIs, while sales declined in cardiovascular, topical, and antibiotic API categories.

医薬品セグメント (Pharmaceutical Product Segment)

• Full-year revenue grew year-over-year, driven by strong sales growth of pre-filled syringe products (notably maxacalcitol for dialysis patients) at Zao Factory that offset sales declines at the main plant from generic competitor entry into the segment's core tablet product and discontinued sales of some older products. Full-year profit grew from improved production efficiency, higher utilization, and a more profitable product mix.
• In Q4, the segment reported year-over-year revenue and profit declines due to temporary production reductions from scheduled 10-year component replacement maintenance at Zao Factory, in addition to annual routine inspection.

• The API segment faces required capital expenditure for the renewal of the Yokohama Pharmaceutical Analysis Center, which will create material cost pressure.
• The pharmaceutical segment faces required capital expenditure for the renewal of the 60-year-old main plant ahead of its 2026 manufacturing business license renewal.
• Annual drug price revisions and the new generic drug enterprise evaluation and rating system from the Japanese Ministry of Health, Labour and Welfare represent market risks: inadequate compliance with new requirements could negatively impact the company's market reputation and business position.
• U.S. reciprocal trade policy impacts are expected to be negligible due to the company's business model of importing APIs and manufacturing finished products domestically in Japan.
• Existing production capacity for high-demand pre-filled syringe products is already maxed out, limiting the company's ability to capture near-term market share gains until the new Zao Second Factory comes online.

Q: What is the current capacity utilization of Zao factories, how much additional demand can existing facilities meet, and will Zao Second Factory cover future projected demand?

A: The company confirms that current Zao First Factory capacity is fully utilized, with no remaining room to expand production of high-demand pre-filled syringes. Zao Second Factory's new capacity is sized to accommodate projected demand growth over the medium to long term. Construction is progressing on schedule, with management working to accelerate launch to meet demand faster if possible.

Q: Why did the company set a 20%+ minimum payout ratio, and what is the long-term dividend policy outlook?

A: The policy is set to balance sustained growth investment with clear shareholder returns aligned with the company's core principle of annual dividend increases as a general rule. The 20% payout ratio is a minimum guideline, and future dividends will be determined comprehensively based on investment needs, profit growth, and return of capital to shareholders after achieving investment return targets.

Q: How will the Zao First and Second factories split production roles, and what synergies will the two facilities create?

A: Zao First Factory will retain its focus on low-volume, multi-product, high-potency drug manufacturing, leveraging its unique positioning in the Japanese market to support specialty products and CDMO services. Zao Second Factory will handle large-volume, low-variety manufacturing of high-demand mainstream pre-filled syringe products. This split will enable the company to serve a broader range of demand, unlock synergies, and expand its CDMO contract manufacturing business.

Q: What is the outlook for demand growth for dialysis pre-filled syringes, and how much can market share grow after Zao Second Factory launches?

A: The dialysis patient market remains stable at over 340,000 patients in Japan, and demand for pre-filled syringes is growing rapidly due to the strong Level 1 A clinical recommendation for pre-filled syringes as an infection prevention measure. The company currently holds over 30% market share for its lead pre-filled syringe product, but is capacity constrained. After Zao Second Factory launches, the company will be able to meet unmet demand and grow market share further.