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Business trends

COVID a mixed bag for Japan's medical and sanitary goods companies

Test kit makers see sales jump while pharmaceuticals struggle

TOKYO -- The yearlong COVID-19 pandemic presented a mixed picture for medical and sanitary goods makers in Japan, as earnings results from companies such as Unicharm, Takara Bio and big drugmakers revealed last week.

Unicharm, best known for its diapers, on Friday announced a 1% decline in sales for the January to March quarter, while its net profit rose 4.6% from the previous year. The company is a major manufacturer of masks and wipes -- goods in high demand for the fight against infection. Unicharm forecasts a net profit of 75 billion yen ($690 million) in 2021, up 43% on the year.

While demand remained strong for masks and other sanitary goods, such as hand soap, consumer products makers saw revenues dip as people eased off from last year's binge buying between January and March.

Lion, which makes the popular medicated soap brand Kirei Kirei, logged flat sales of 82.4 billion yen in the January to March quarter this year, down 0.1% from 2020. Kao's revenue dropped 5% to 320 billion yen during the same period. Kao's sales of hygiene-related products dropped compared with the previous year, while its cosmetics business suffered from a dearth of overseas tourists in Japan and the off-and-on state of emergency that has kept people at home.

COVID-19 has kept health care and hygiene in the spotlight for over a year. For some companies, earnings for the fiscal year ended March represent the entire pandemic period. Test kit makers have emerged as winners, while pharmaceutical companies generally suffered, as people visited doctors less frequently for conditions other than the novel coronavirus.

Takara Bio's sales for the fiscal year ended March jumped 33% from the previous year to 46 billion yen. Sales of its PCR testing reagent reached about 13 billion yen worldwide. "As economic activities resume, it is natural to assume that there would be demand for testing as a result, such as for events, quarantines and the Olympics," said Koichi Nakao, Takara Bio's president and CEO, told reporters on Thursday.

Another test kit maker, Shimadzu, saw its sales climb 2% to 393.4 billion yen in fiscal year ended March, while its operating profit rose 18.9%. That growth was backed by coronavirus-related products, including virus detection reagents, automated PCR testing systems and X-ray systems for diagnosing pneumonia.

"There was a contrast between businesses that grew due to the coronavirus, and businesses that declined," such as the company's aircraft equipment business, said President and CEO Teruhisa Ueda at a news conference. He added that Shimadzu will invest to develop new COVID-19-related products, including tests that can be used to verify the efficacy of vaccines.

Eiken Chemical's sales of COVID-19 detection reagents and genetic testing devices also grew significantly, making up for declines in sales of other products. The company's revenue increased 5.7% on the year to 38.6 billion yen in the fiscal year ended March, while its net profit jumped 42.5% to 5 billion yen. Precision System Science, which sells an automated PCR testing system, announced on Friday that its revenue shot up 103% to 6.8 billion yen between July and March compared with the same period of the previous year.

Big drug companies generally saw revenues decline during the pandemic, despite making headlines for efforts to deliver COVID-19 vaccines and treatments. Trials of some new drugs were delayed to minimize the risk of spreading COVID.

Astellas Pharma's sales slipped 3.9% to 1.2 trillion yen versus the previous fiscal year, as it ended sales of some products. While sales of major cancer drugs grew, some did not meet expectations as fewer people visited hospitals amid the pandemic. Takeda Pharmaceutical's sales fell 2.8% to 3.1 trillion yen in the fiscal year ended in March, but the company said the pandemic had a limited effect on its earnings.

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