Eisai Reports Double-Digit Sales Rise; Takeda Raises Outlook in Q1 FY2008/09

Beginning with Eisai, the company's net sales rose by 11.2% year-on-year (y/y) in the first quarter of FY2008/09 to reach ¥195.8 billion (US$1.81 billion), while its operating income and net income fell by 8.1% and 14.0%, respectively, to stand at ¥24.1 billion and ¥16.6 billion. However, discounting the impact of its acquisition of MGI Pharma, Eisai reports that its operating income would have risen by 22.7% to ¥32.1 billion, while its net income would have risen by 17.0% to ¥22.6 billion.

Turning to Takeda, the company's net sales rose by 8.3% y/y to ¥369.9 billion in the first quarter of FY2008/09, with this figure boosted by the inclusion of TAP and Millennium Pharmaceuticals from May onwards. However, for the first time ever, Takeda recorded a quarterly operating loss (-¥27.2 billion), and the company's net income plunged by 98.1% to just ¥2.5 billion.

Following their acquisitions, both Takeda and Eisai recorded large operating costs, with R&D accounting for as much as 59.2% of Takeda's net sales in the first quarter. For Takeda, the huge expenses reflect not only its acquisition of Millennium Pharmaceuticals, but also the acquisition of the Japanese unit of Amgen, a global licensing deal with Amgen (U.S.), and the dissolution of its TAP joint-venture (JV) with Abbott (U.S.) and TAP's subsequent integration as a wholly owned subsidiary (see United States: 2 July 2008: Takeda, TAP Finalise Merger).

Looking specifically at the pharmaceutical sector, Eisai's sales grew by 11.6% y/y to reach ¥190.6 billion, with the largest single proportion of this coming from North America (¥89.3 billion; +16.7%). The company's pharmaceutical sales in Japan rose by 8.6% to ¥79.8 billion. Meanwhile, Takeda's pharmaceutical sales in Japan fell by 1.6% to ¥138.4 billion, while its overseas pharmaceutical sales shot up by 17.3% to ¥220.8 billion, largely on account of its growth in North America.

In terms of individual brands, Alzheimer's drug Aricept (donepezil) was Eisai's star performer, with sales rising by 8.3% to ¥72.9 billion. The product's sales grew by a healthy 30.2% in Japan to reach ¥19.4 billion, although its biggest market was the United States, where sales rose by 4.6% to ¥43.4 billion. Eisai's chemotherapy anti-emetic Aloxi (palonosetron)—which was acquired via the purchase of MGI Pharma—also performed strongly in the United States, achieving sales of ¥9.5 billion.

Turning to Takeda, many of the company's leading products experienced a difficult time in its domestic market: for example, Blopress's (candesartan) sales were down by 3.6% to ¥34.7 billion, while Leuplin (leuprorelin) fell by 5.5% to ¥16.6 billion, and Basen (voglibose) fell by 12.2% to ¥12.6 billion. However, in the United States, the company was buoyed by the inclusion of sales revenues from TAP since May, which led to reported U.S. sales of Takepron (lansoprazole) rising by 239.1% to ¥46.2 billion.

Outlook and Implications

For both Takeda and Eisai, the integration of newly acquired businesses inevitably means that the headline sales and profit figures cannot be taken at face value. A more accurate measure of growth is the performance of individual brands and the progress that has been made in terms of pipelines products. Eisai has done well to achieve strong growth in its domestic market despite the country's difficult operating environment, which has seen many of the company's peers suffer in the first half of the year. Moreover, Eisai's Japanese portfolio has also recently been buoyed by the addition of Humira, whose sales are expected to peak at ¥38.89 billion (see Japan: 17 June 2008: Abbott, Eisai Announce Imminent Humira Launch in Japan).

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