On July 25, 2019 Chugai Pharmaceutical Co., Ltd. (TOKYO: 4519) reported its financial results for the first half of the fiscal year ended December 31, 2019 (Press release, Chugai, JUL 25, 2019, View Source [SID1234537724]).
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Chugai reported record high revenues, operating profit and net income for the second consecutive quarter. Revenues increased by 12.3% due to a double-digit sales growth driven by the contribution of new products, mainstay products and strong exports as well as increases in royalties and other operating income related to Hemlibra. Operating profit increased by 44.6% due to a better cost to sales ratio as the proportion of in-house products increased in the total product mix.
Revenues]
Domestic sales increased to ¥210.0 billion (+9.9%) driven by contribution from new products including the hemophilia A treatment Hemlibra created by Chugai and the immune checkpoint inhibitor Tecentriq as well as the strong growth of mainstay products chiefly in oncology area and bone and joint diseases area, despite the negative impact from generic competition and the NHI drug price revisions last year.
Oncology: Sales increased driven by the contribution of new product Tecentriq and Gazyva, as well as solid growth of Perjeta and Alecensa, despite the negative impact from generic competition facing Rituxan.
Bone and joint diseases: Sales recorded a double-digit increase due to steady growth of mainstay products such as anti-rheumatic agent Actemra and the osteoporosis agent Edirol.
Renal diseases: Sales were almost flat while sales of the renal anemia agent Mircera and the secondary hyperparathyroidism treatment Oxarol approximated the previous year’s level.
Others: Sales increased by about 20% due to steady market penetration of the new hemophilia A treatment Hemlibra, despite the negative impact from the transfer of long-term listed products last year.
Overseas sales increased to ¥72.4 billion (+12.2%) due to increase in exports of Alecensa to Roche.
Royalties and other operating income increased to ¥37.9 billion (+28.5%) due to increase in royalties and profit sharing income relating to Hemlibra.
Core gross profit increased to ¥192.7 billion (+23.1%) due to sales growth and the better cost to sales ratio with a high proportion of in-house products in the total product mix.
Core operating expenses grew by a single-digit percentage to ¥89.2 billion (+5.1%), more modestly than the growth in Core gross profit. As a result, Core operating profit totaled ¥103.5 billion (+44.6%).
About Core results
Chugai discloses its results on a Core basis from 2013 in conjunction with its decision to apply IFRS. Core results are the results after adjusting non-Core items to IFRS results, and are consistent with the Core concept disclosed by Roche. Core results are used by Chugai as an internal performance indicator, for explaining the underlying business performance both internally and externally, and the basis for payment-by-results such as a return to shareholders.
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