April 4, 2014 2:00 am JST

Japanese drugmaker Taisho to top profit forecast for fiscal 2013

TOKYO -- Taisho Pharmaceutical Holdings Co. is expected to report an operating profit of 41 billion yen ($390 million) or so for fiscal 2013, beating its forecast of 38 billion yen on stronger demand for a hair-loss remedy in Japan and brisk Southeast Asian sales of anti-fever painkillers.

     The new figure, up 16% on the year, will mark a new record for the drugmaker since it reorganized under the holding company in 2011. The old Taisho Pharmaceutical logged an 84 billion yen profit in fiscal 1999.

     The company was also helped by the weaker yen and higher sales of profitable new prescription drugs.

     Taisho had initially predicted a 39.5 billion yen profit. But at the close of the first half, it trimmed that sum to 38 billion yen on the heels of worse-than-expected sales of its Lipovitan energy drink during the interim period.

     Sales of the tonic pepped up again after that, in part because more customers rushed to buy it in bulk last month before the consumption tax hike took effect.

     The company says the pre-tax-hike rush also gave a marked boost to sales of such products as the RiUp X5 hair-growth formula, which retails for more than 7,000 yen a bottle. Its Pabron comprehensive cold remedy saw steady sales thanks to heavy snowfall in February.

     The drugmaker appears to have topped its sales forecast of 294.5 billion yen, up 3%, in the year ended Monday.

     Overseas operations apparently now generate about 9% of sales, up from 3% in fiscal 2009. Revenue grew for Asian holdings acquired in 2009 from Bristol-Myers Squibb of the U.S. Sales are climbing for high-margin products with well-established brands like the Tempra anti-fever painkiller marketed in such countries as Indonesia.

     In the segment handling such products as vitamin drinks and OTC drugs, revenue apparently climbed about 5%. Operating profit will likely rise as well, with the arm also having spent less than planned on advertising.

     The prescription drug business, meanwhile, appears to have logged sales of just over 110 billion yen, nearly unchanged from the previous year. Yet operating profit apparently shot up as the segment cut back on contract production of relatively low-margin semimanufactured products while boosting sales of new, high-margin drugs. Offerings made by subsidiary Taisho Toyama Pharmaceutical Co., such as the Zosyn antibiotic and the Edirol osteoporosis drug, helped prop up profit as well.

     In fiscal 2014, drug price cuts are seen having an impact on the prescription drug business. Such products as the company's vitamin drinks will likely suffer from a post-tax-hike dip in demand. The question then turns to how much the group can boost overseas sales of OTC drugs.