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Good morning, let me present the Overview of Consolidated Financial Results for the Second Quarter Ended March 31, 2018. Please take a look at this table. For our business segments and group companies as of the end of March 2018, our group consists of total 26 companies that include CMIC Holdings, a holding company, 23 consolidated subsidiaries including 13 overseas affiliates and 2 equity-method affiliated companies.
Here is a summary for the first half of the fiscal year ended March 31, 2018. To achieve sustainable growth in the healthcare and the pharmaceutical industry, at this time of change, CMIC Group is pushing forward Project Phoenix. Project Phoenix 2.0 was executed from the second half of 2016 to the first half of 2018 to establish the agile management style, increase the number of PVC contract solutions project that our strength, and to promote the provision of IPM solutions that combine value chains and the manufacturing authorization licenses held by the CMIC Group.
In April 2018, CMIC Group's management organization was reorganized into 4 business units to further promote globalization and add a new leadership, and Project Phoenix 3.0 has started in preparation for the "Healthcare Revolution". For our CRO business, we promoted readiness for the evolving field by in-housing PMS and clinical research support business using medical database, strengthening analytical services for nucleic acid drugs, and participating in the technology consortium, aiming at the clinical application of platelet preparations derived from Human IPS cells. For CDMO business, we concluded our capital and business tie up agreement with Development Bank of Japan toward further growth and prepared for the full-scale launch of a new injection building at Ashikaga plant in October.
For CSO business, we acquired new large-scale project using PVC model. For SMO business, we jointly developed a clinical trial support solution with NEC Corporation using AI voice recognition technology to promote efficiency of SMO operations. For IPM business, OrphanPacific Inc. launched hypertension drug, Rasilez tablets, 150 milligram. In terms of readiness for the evolving fields, we have enhanced R&D consulting, animal and analytical laboratory services provided by CMIC Pharma science and CMIC Inc. and high potency drug manufacturing, including anticancer drugs at the new injection building in Ashikaga.
This is the summary of consolidated income statement. Sales for first half grew JPY 1.897 billion or 6.0% year-on-year to JPY 33.64 billion. Operating income increased by 29.9% or JPY 569 million year-on-year to JPY 2.471 billion. Ordinary profit increased by 17.9% or JPY 337 million year-on-year to JPY 2.25 billion. Profit attributable to owners or parent for the second quarter of the current fiscal year was JPY 489 million, down JPY 44 million year-on-year due to increase of combined income taxes, following the withdrawal of CDMO business from the CMIC Group consolidated tax return filing system.
Next is a breakdown of nonoperating and extraordinary income or loss for this turn. While nonoperating income, such as interest income, recorded JPY 39 million, nonoperating expenses, such as foreign exchange losses, interest expenses and share of loss of entities accounted for using equity method, recorded JPY 285 million. Now extraordinary income was recorded but JPY 287 million was recorded as extraordinary loss, including JPY 252 million loss on division of pay regulations and loss on sales and retirement of fixed assets. In addition, because CMIC CMO company are fully owned subsidiary of CMIC Holdings, becomes a joint venture in June 2018, and shall withdraw from the CMIC Group consolidated tax return filing system. JPY 1.45 billion in total income taxes was recorded due to increase of income taxes deferred, impacted by the rest of deferred tax assets.
This table shows sales and operating income by segment. While CDMO, CSO and healthcare posted profit drops compared with the same period of the previous year, they were offset by the strong performance of the CRO business.
This table shows orders received and backlog. CRO business continued to increase the number of orders, while order intake is on the track to recovery for CSO. It was slightly sluggish for healthcare. For CDMO business, only firm orders are included in the backlog, and the annual audit plans proposed by customers are excluded.
This shows the trend in consolidated sales and operating income. We continue to achieve increase in income and profit for this term, and operating profit ratio was 7.3%. This shows the trend in CRO sales and operating income. For this first half, while striving to secure human resources to meet the robust demand in clinical services, we have decided to integrate CMIC Co. and CMIC-PMS Co. in October this year to further enhance the post-marketing and clinical research support business using our database. Preparation is underway to establish an organization to provide end-to-end support that covers from clinical trial to PMS. For nonclinical services, CMIC Pharma Science Company and CMIC Inc. in the United States, have announced their collaboration to provide drug discovery support for the next generation drugs, including nucleic acid drugs and regenerative medicine.
Sales and operating income exceeded those of the same period of the previous year on growth in new orders and existing contracts. Sales for this term increased by 12.4% to JPY 18.553 billion. Operating income is JPY 3.929 billion, and operating profit ratio was 21.2%.
This shows the trend in CDMO sales and operating income. In this first half, we are improving productivity and efficiency through total service provision for drug manufacturing that includes formulation design, investigation on new drug manufacturing and commercial production. In addition, the Ashikaga plant is making progress in constructing a new injection building that's capability to manufacture high potency drugs, which is scheduled to start full operation in October this year.
In addition, in March, we concluded a [ capital ] business tie up agreement with Development Bank of Japan to promote broader strategies and expand our business through utilization of DBJ funding personnel and network in Japan and overseas in addition to our growth based on existing business. Sales exceeded that of the same period last year, thanks to robust progress of new contract manufacturing projects.
Operating loss was recorded due to temporary production volume decrease of existing orders at CMIC CMO USA Corporation, and the commercial production startup expenses for the new injection building in Ashikaga. Sales of CDMO business increased by 2.2% to JPY 6.786 billion, and operating loss was JPY 525 million. This shows the trend in CSO sales and operating income.
For this first half, CMIC Ashfield has worked steadily to strengthen its capacity to take MR dispatching orders and move through existing projects. They're also providing comprehensive commercial solutions that combine MSL and remote channels in addition to MR dispatching. Sales exceeded that of the same period last year, thanks to robust progress of new large-scale contract projects, but operating income is less than that of the same period last year due to the hiring cost generated to take on large-scale projects. CSO sales increased by 1.0% to JPY 3.486 billion. Operating income was JPY 153 million, and operating profit ratio was 4.4%.
This shows the trend in healthcare sales and operating income. For this first half, Site Support Institute has acquired new orders and provided new services, such as Medical Concierge Services. In addition, we have jointly developed a clinical trial support solution with NEC Corporation using AI voice recognition technology to promote efficiency and quality of SMO operations. Sales and operating income were higher in the same period last year due to strong sales of large-scale project, but the sales and operating income decreased in the first half of this year due to absence of such projects.
Healthcare sales decreased by 10.3% to JPY 3.607 billion. Operating income was JPY 465 million and operating profit ratio was 12.9%. This shows a trend in IPM innovative Pharma model sales and operating income. IPM business provides new Business Solutions to pharmaceutical companies that combine value chains and marketing authorization licenses, intellectual properties possessed by our group. We are mainly delivering development and marketing services for orphan drugs and diagnostics. In our orphan drug business, OrphanPacific Inc. is selling orphan drugs, including products developed in-house. Further, we are strengthening the business foundations for provision of IPM platform, such as supporting falling companies entering the Japanese market, and launched hypertension drug, Rasilez tablets 150-milligram in March that was transferred from Novartis Pharma.
In the diagnostics business, we began selling simple test kits, dip test, for the in vitro diagnostics human L-type fatty acid-binding protein kit, developed by CMIC Group, for the purpose of diagnosing renal diseases, and we are working to expand the market and strengthening promotions. Sales and operating income exceeded that of the same period last year, thanks to the sales increase of the orphan drug business, and operating loss is decreasing. We are continuing to expand our business scale through provision of new solutions, aiming for positive turnaround. IPM sales increased by 14.5% to JPY 1.42 billion. The operating loss was JPY 111 million. We are starting to see the benefit of providing IPM solutions that lead to new orders in CRO and other businesses. Those are the invisible benefits of IPM business.
Next, I would like to explain our consolidated balance sheet. Total assets at the end of the first half of this financial period increased by JPY 3.769 billion to JPY 69.375 billion. This is mainly due to increase in fixed assets, JPY 2.33 billion, through capital investments for CDMO business. Capital investment for the first half of the financial period is JPY 3.019 billion. Depreciation is JPY 1.511 billion and amortization of goodwill is JPY 177 million. Total liabilities increased by JPY 2.984 billion to JPY 44.982 billion, mainly due to an increase in short-term debts. Total net assets increased by JPY 784 million to JPY 24.393 billion, mainly due to net annualized holding gains on securities, JPY 766 million.
Net cash flow from operating activity was JPY 1.986 billion in gain, plus net income depreciation and corporate tax payment. Net cash flow from investing activity was JPY 1.266 billion in spending due to outflow of JPY 4.153 billion from acquisition of tangible and intangible fixed assets. Net cash flow from financing activity was JPY 2.853 billion due to inflow from the short-term loans from financial institution. As a result, cash and cash equivalents as of the end of March 2018 was JPY 5.481 billion.
Full year 2018 outlook remains unchanged. Sales forecast is JPY 70.5 billion. Operating income is estimated to be JPY 4.3 billion. Ordinary income is estimated to be JPY 3.93 billion. Profit attributable to owners of parent is JPY 1.7 billion, and earnings per share is estimated to be JPY 90.89. This concludes my presentation of financial overview.
Good morning. My name is Nakamura, and I would like to speak about our activity highlights in first half of 2018. First, CDMO business. CDMO plays very important role in our PVC model. And we concluded a capital and business tie up agreement with Development Bank of Japan. The purpose is to secure capital investment funding and to utilize DBJ personnel and corporate network in Japan and overseas. The business is starting in June 2018, and I would like to introduce Mr. Matsukawa, who is in charge of this new business.
My name is Matsukawa. Starting in June 2018, I will be focusing on CDMO, the joint venture with DBJ. And I would like to speak about the strategic direction and the CDMO business growth stage. I will cover only the main points.
For the existing business, I will steadily enhance the business foundation, especially for the -- I will focus on the mid-term organic growth. There are several strengths we have, and I would like to speak about 3 strengths of ours. First, our strength is our capability to -- of formulation development, and we have CRO business, including preclinical. We can -- we are good with formulation development, and that way, we can incorporate the upstream process. For pharmaceutical products development, pharmaceutical companies are now seeking the solution provider who can -- to whom they can outsource upstream processes, and that is exactly our strength. We have extensive experience in that arena. We have formulation development capability and preclinical capabilities to provide early-stage of pharmaceutical value creator. And for example, we design IMP manufacture -- design and develop IMP, manufacture, conduct clinical trials, end-to-end solution provider, all the way to the consumers, and that is a very profitable business. And secondly, we have manufacturing capability for high-potency drugs. There's a high market demand for high potency drug injectables we are going to manufacture at Ashikaga plant. That is a highly promising market globally as well, and we would like to execute the business focusing on such technology.
In the past, we made a capital investment to our Toyama plant to manufacture high alcohol content products, and we would like to focus on that. Such high potency drug manufacturing technology is our strength, and we will continue to strengthen it. And thirdly, we have a manufacturing base in the United States. I do not recall any CDMO in Japan who has a U.S. manufacturing base, very few, and American market is growing. And we would like to focus on American market continue to -- continue with capital investment and a business growth.
And last, but not least, quality is very important. And we would like to continue to focus on capital investment and personnel development. In the mid-to long-term, firstly, for mid-term, we'll focus on mid-term organic growth to strengthen our foundation. And as a long-term goal, we are looking at long-term disruptive growth, with M&A and large capital investment consulting with DBJ. Looking at the market movement, we would like to focus on those strengths and develop the business foundations, and also looking at proactive large capital investment and acquisition for the future business foundation growth, and those are the main points for CDMO business.
And now I would like to speak about Project Phoenix 2.0 results that ended in March 2018. Project Phoenix 2.0 lasted for 2 years from April 2016 to March 2018. Our focus was the deorganization and personnel training for agile management style of transformation. And in this rapid environmental changes, we were able to establish the agile management system that quickly address such changes. And secondly, providing solutions, using PVC functions, and then our provision of Innovative Pharma model platform, the pharmaceutical company that exists for the sake of pharmaceutical companies. And the organization toward the agile management, we established 2 top execution by CEO, COO. CEO is responsible for business strategies, while COO is responsible for group-wide operations to promote business growth strategies.
And this is business solutions using PVC. Japan Business Solutions supports those companies with no foothold in Japan to enter the second biggest market in the world that is Japan. And our new entrants business solution, we support the new entrants from different sectors entering the pharmaceutical industry. Thirdly, academia business solution. In overseas academia, it is responsible for 1/3 of new drug discovery, and we provide comprehensive support for development of innovative academic disease.
And business model conversion solution. We support for further increase of outsourcing, following the strategy conversion of pharmaceutical companies. The resell -- they may sell OTC long-listed products oncology drugs, and we provide solution to such companies, and we support all value chains. So we provide one-stop solution to manage the overall projects and improve the efficiency.
And recently, the Japan Business Solution, we're seeing increased number of our inquiries and orders also for new entrants business solution. There are several companies from different sectors are now entering the pharmaceutical industry. And we are now seeing the increase of inquiries and orders for IPM platform business expansion. Started in March 2018, we launched the direct renin inhibitor, Rasilez 150 milligram. The marketing authorization holder was a major global pharmaceutical company, but they transferred that item to the overseas pharmaceutical company with no foothold in Japan. And we provided Japan Business Solution an innovative pharma model to launch this product.
And our intellectual property, we expanded the sales channel and strengthen the promotion for L-FABP, the kidney disease biomarker. L-FABP is the prognosis mark-up from diabetic mellitus to diabetic nephropathy. But since no result, it's still available from the global large-scale study, the -- it is not used as a biomarker yet. However, we do have such results, and now we are trying to establish the positioning as a preventive biomarker, and orphan drug is increasing its sales, and this is the focus of our sales. In 2018, we estimate the sales to be JPY 3.4 billion.
This is Project Phoenix 3.0, started in April 2018. Why are we focusing on "Healthcare Revolution"? Because we are looking at emergence of the "Healthcare Revolution" in the healthcare arena. In 2005, 13 years ago, we proposed this business model. We established the first CRO in Japan back in 1992. And back then, we had a team of clinical operations specialist. In 2005, we had a pharmaceutical affairs law changed, transitioning from manufacturing authorization to marketing authorization. That's when we started our CMO business. That's when we had all value chains, namely CRO, CMO, CSO, and then that's when we started developing the new business model pharmaceutical value creator to contribute to maximize the value of pharmaceutical companies. And we are looking at the healthcare value creator for the future path. We thought that will be suitable for the new era of medicine.
And now we call it social impact. Social impact, meaning personal healthcare and also "Healthcare Revolution". And we consider we are one of the CRO in the pharmaceutical companies in the "Healthcare Revolution" era. And that's how we started out Phoenix 3.0. Why "Healthcare revolution" now? Because Japan's famed longevity and is now facing paradox, in my opinion. The Japanese average life expectancy back in 1960 is much lower than average of advanced nations. Back in 1960, the average life expectancy was about 75 or 76 years old. And we're extending the average life expectancy in Japan, by far, reached the longest life average expectancy. We are at the top class of the world. That is a good news. Very happy. But at the same time, we are facing the financial crisis, because the current healthcare system, including the health insurance is based on the assumption back in 1916 -- 1960. And looking at the 2050 forecast, median life expectancy among G-7 countries for 2050, according to nature, they expect the average life expectancy go beyond 90 years old in 2050, and we may reach the era of 100 years old. Even now, we are facing the financial crisis, but our healthcare system will be no longer sustainable in 2050. And that is a paradox I call for the Japan's famed longevity.
And I will now speak about the gap between average life expectancy and healthy life expectancy. The unhealthy period, the definition of it, is that you cannot live day-to-day living without the support from others, and the gap is estimated to be approximately 10 years. And as average life expectancy extends to 90 years and beyond, our financial burden -- the social burden will increase further. And the pharmaceutical companies will be very impacted significantly. There may be some expensive drugs, including oncology products that put us in question whether such drugs should be prescribed to elderly over 90 years old.
And this is the transition of the national medical expenditure ratio to GDP. It is increasing every year. And what is CMIC thinking about this trend? We now aim to achieve the sustainable healthcare system. We would like to provide our services to achieve sustainable healthcare system. We have to provide answer for personal health value. And also we need to think about how healthcare should be in that social system facing various issues now, and we have to provide solutions to those. And we have to think about the roles of pharmaceutical companies, medical device companies and nursing care -- elderly care, and one answer to it is the contribution to personal health value, and also the social -- sustainable social health care system. We started our business from that perspective. Now the healthcare players -- healthcare -- players in healthcare arena is increasing, and we're shifting from disease treatment to disease prevention. And also for elderly care, we need to -- their satisfaction is the 57th in the world. Our elderly people do not consider them as happy as they live longer. And we need to think about the value of healthcare, and we need to provide new solutions to address such issues.
And this is the regional comprehensive care system and establishment of it. The regional healthcare function is shifting from central government to municipal governments. Recently, the governor's declaring that we are #1 healthy prefixture or the healthy longevity. However, such a declaration lacks specific actions, and they may be facing financial issues in the municipal government. And we would like to provide solution in such -- for such issues. We partner with 3 Rock, the consulting company that provides marketing solutions. They're a small mighty group to provide such services to pharmaceutical marketings and other business marketings. And now we are aiming at developing the ground design for each region for recent medical concept and regional comprehensive care. And we established a new joint venture company, called C3, and working with the municipal government. For example, we meet with municipal governor, and those responsible for such operation to do some brainstorming about healthcare and issues. Some region may say that they have too many hemodialysis, and many patients now are undergoing hemodialysis patients. And they want to reduce such cost. And other regions may be concerned about low medical examination rates. And we work -- we listen to their concerns, identify issues together, and if they have -- if Big Data or health insurance data is available, we work with administrators and responsible individuals to set out specific actions. We set the goals, objectives. We form a consortium to provide solutions. That's what we started doing. In the past, from pharmaceutical companies perspective, they had a term, health technology assessment, that means when they launch a pharmaceutical drug in the market, they assess the economic effect and the medical effect. But what I'm speaking about now is, broader terms, how can we make the healthcare sustainable in the social system? And this consortium mechanism may involve local government healthcare companies, healthcare professionals, patient, citizens, groups and university hospital medical institutions, and each region has a specific need. So we closely work with them as a pilot case providing consultation.
"Healthcare Revolution", what we expect in the future, as Charles Darwin said that "We need to adjust best to the changing environment in which it finds itself." So that's how we set up the concept of "Healthcare Revolution". And looking at CRO, from that perspective, CDMO and our business, and also how we can contribute in the society, and that is my sincere hope.
And this is CMIC's CREED. Back in Project Phoenix 1.0, we developed this determination. We are determined -- allow me to read this, we are determined to bring innovation to healthcare, so that all people, regardless of age and gender, can live their precious lives according to their will. This is our aspiration as a CMIC Group, whether in childhood when valerians has yet to blossom or in later on, when potential has bloomed, we respect every individual drive to live fully in the moment. We shall sincerely address each and every life. We shall overlook no one.
To achieve this, we should continually challenge ourselves to strive for a better future. We shall transform ourselves, seek new vantage points, turn our unwavering passion into values, and continue to contribute to individual society. In April this year, we shifted from CRO to PVC, and a higher-level concept of "Healthcare Revolution". That's where our business is heading.
That concludes my presentation. Thank you for your kind attention.