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Hello, I am Hanasaki. Now, I'd like to explain the third quarter financial results. Page 2 describes our consolidated financial results. Sales were JPY 263.4 billion, an increase of 2.7% or JPY 6.8 billion, and the progress versus full year forecast was 76.3%. Operating income was JPY 90.1 billion, an increase of 2.7% or JPY 2.4 billion, and the progress versus forecasts was 79.4%. Ordinary income was JPY 105.5 billion, an increase of 15.9% or JPY 14.5 billion, and the progress versus forecasts was 79.9%. Profit attributable to owners of parent was JPY 79.7 billion, an increase of 18% or JPY 12.2 billion, and the progress versus forecasts was 78.9%.
Sales and profit items are all progressing steadily against the annual forecasts. Specifically, 9 months results of operating income and profit attributable to owners of parent were higher than the levels of any prior fiscal years for 3 consecutive years. We also enjoyed a record high ordinary income for 9 consecutive years.
Please look at the exchange rate on the right bottom. Japanese yen, GBP, and Euro were all weaker than our forecasts.
Page 3 shows you the statement of income. Sales were JPY 263.4 billion, an increase of 2.7% and the progress versus forecasts was 76.3%. Royalty income from HIV franchise and Crestor was JPY 91 billion, an increase of 22.4% and the progress versus forecasts was 72.3%. This was mainly due to an increase of royalty income from ViiV. Cost of sales was JPY 56.7 billion, a decrease of 4.9% and the progress versus forecasts was 74.1%.
Gross profit was JPY 206.6 billion, an increase of 5% and the progress versus forecasts was 77%. SG&A expenses were JPY 116.5 million, an increase of 6.7%. And the progress versus forecasts was 75.2%. Selling and administrative expenses were JPY 70.9 billion, and the progress was 70.9%, while R&D expenses were JPY 45.6 billion with the progress of 82.9%.
As for our global Phase III study for baloxavir marboxil, our anti-influenza drug has been progressing steadily. We are investing in the development. However, we managed selling and administrative expenses to control SG&A as a total. Therefore, the progress stayed at 75.2%.
Operating income reached JPY 90.1 billion, an increase of 2.7%, and the progress versus forecasts was 79.4%. Non-operating income and expenses were JPY 15.3 billion, mainly due to our receipt of dividend from ViiV.
Ordinary income was JPY 105.5 billion, an increase of 15.9%, and the progress versus forecasts was 79.9%.
This page shows you year-on-year comparisons and main variation factors of P&L.
Sales increased by JPY 6.8 billion compared to the previous fiscal year, driven by a sales expansion of our strategic products such as Cymbalta, Intuniv, and Symproic. Also royalty income from HIV franchise increased by JPY 25 billion. Furthermore, we received payments from Roche regarding baloxavir marboxil. We received JPY 10 billion in the second quarter due to a change of the royalty scheme, and JPY 8 billion in the third quarter due to our milestone achieved by the agreement relative to NDA submission in the U.S.
Cost of sales ratio including royalty improved by 1.8%, mainly due to an increase of royalty income. However, cost of sales excluding royalty income, increased by 0.2%. This is due to an effect of product mix as well as an increase in contract manufacturing of API for dolutegravir.
Selling and administrative expenses increased by JPY 2.1 billion year-on-year, mainly because of an advanced investment in new products. R&D expenses increased by JPY 5.3 billion mainly due to an investment in global development of baloxavir marboxil.
Non-operating income and expenses increased by JPY 12.1 billion, because sales of HIV franchise grew and also ViiV paid us dividend of JPY 12.1 billion in accordance with the revision of our contract. As a result, ordinary income increased by JPY 14.5 billion.
Next, let me explain sales by segments. First, domestic sales of prescription drugs were JPY 108.4 billion, down 11% year-on-year, and the progress was 75.2%. There'll be more detailed explanation later, but while we expanded our strategic product sales, some transfer items dragged our sales last year.
Overseas subsidiaries and export was JPY 17.5 billion and the progress was 68%. This figure includes JPY 8.4 billion of Shionogi Inc. sales and the progress was 74.7%. Its Osphena sales were JPY 3 billion, and the progress was 76%, thanks to an advancement of our joint research with Duchesnay.
Sales of contract manufacturing were JPY 11.8 billion, up 33.8% year-on-year, with the progress of 76.4%, due to an increase in contract manufacturing of dolutegravir API. Both of the year-on-year change and the progress versus forecasts for OTC and quasi-drugs segment were improved, partially, due to a favorable sales of [ pylon PL ] launched in August.
Total royalty income was JPY 118.1 billion, up 45% year-on-year, and the progress was 78.5%. This includes JPY 74 billion of HIV franchise sales, up 50% year-on-year, and Crestor sales were JPY 17 billion, down 32% year-on-year. The remaining royalty income includes JPY 18 billion, paid by Roche in the second and the third quarter. As a result, April, December sales were JPY 263.4 billion, up 2.7% year-on-year.
Page 6 shows you the year-on-year comparison and main variation factors for sales by segment.
Contract manufacturing was up by JPY 3 billion, mainly due to an increase in contract manufacturing of API for dolutegravir. Royalty income as a whole increased by JPY 36.4 billion, because royalty income of HIV franchise increased by JPY 25 billion, although that of Crestor, declined. However, we received JPY 18 billion, as a royalty income of baloxavir marboxil from Roche, in the second and the third quarter. Although, domestic prescription drug segment enjoyed sales expansion of strategic products, the segment sales were pushed down mainly due to a transfer of marketing rights of long-listed drugs.
Overseas subsidiaries and exports decreased by JPY 5.4 billion, due to a decline of royalty income from FORTAMET AG, an authorized generic licensed out to Teva in the U.S.
Others were affected by the absence of the receipt of upfront payment for transferring marketing rights for long-listed drugs in the previous year. As a total, sales were JPY 263.4 billion.
This page is about sales of prescription drugs in Japan. First, total sales of strategic products were JPY 19.8 billion, up 40% year-on-year and the progress versus forecasts was 69.4%. Cymbalta sales were JPY 18.2 billion, up 28.8% year-on-year with the progress of 70.3%.
Our effort to focus our sales resources in the pain area resulted in an increase of almost 30%.
Intuniv sales were JPY 1.2 billion and Symproic sales were JPY 380 million. Sales of new products as a total were JPY 33.9 billion, up 17.5% year-on-year, and the progress versus forecasts was 71.1%. On the other hand, Crestor was JPY 26.3 billion, down more than 20% and the progress was 76.4%. Sales were significantly down due to the authorized generic and quick penetration of the generic product launched in December. Other prescription drug sales in Japan were JPY 36.3 billion, down 23.6% year-on-year, because of a transfer of long-listed drugs. As a result, total sales of prescription drug in Japan were JPY 108.4 billion, down 10.6% year-on-year with the progress of 75.2%.
Page 8 shows year-on-year comparison and main variation factors. Under strategic products, through sales expansion of Cymbalta in the pain area and maximizing the value of Intuniv as mentioned earlier, our sales increased JPY 5.7 billion. Crestor sales dropped JPY 6.8 billion due to early uptake of generics. For other prescription drugs, which will be explained later, the sales plunged due to the transfer of marketing rights for long-listed products. With that, I'd like to conclude my explanation on financial statements.
My name is Sawada. I'm going to present the second half. Page 9 shows our key actions for the second half of fiscal 2017 presented in our previous briefing. I'd like to provide an update using the slide. First, sales in Japan as shown on Page 10, Cymbalta and Intuniv are our growing new medicines in the CNS area. Cymbalta enjoys a claim in the pain area with growing prescription especially in OA and CLBP. It also maintains top share in depression, which the drug was originally indicated for. All these are driving the sales even further. As part of our ongoing efforts, we'd like to concentrate our sales resources on the pain area.
Regarding maximizing the value of Intuniv for ADHD, the product receives a high satisfaction rate with its efficacy and safety attained by its novel mechanism.
The number of prescription is increasing as a result. After 8 months since the product launch, the accumulative product sales is already exceeding those of the conventional ADHD drugs, reflecting high levels of patient and physician satisfaction with Intuniv. In addition to driving the prescription share, we'd like to promote knowledge of ADHD and advocate the need for social support. Through those efforts, we'd like to encourage patients unsatisfied with the current treatment to switch to Intuniv. In addition, in order to raise treatment satisfaction itself, we also would like to promote the adjunctive use of Intuniv.
Next is OxyContin. As shown on Page 11, tamper-resistant formulation was launched last December. By contributing to preventing opioid misuse and abuse, we would help achieving a better society. Again, tamper resistant or TR formulation has properties that make it difficult to crush. We believe that it can deter abuse and misuse compared to the current formulation. To promote and ensure the proper use of OxyContin, we aim to adapt the new formulation as quickly as possible.
Going forward, we'd like to examine the possibility of formulating other products to deter abuse as well. On anti-flu drugs, we were notified that our new product had passed through the special committee on drugs at the end of last week. Accordingly, preparations are underway for the expected launch with Rapiacta injectable, a clinical study has initiated its enrollment of patients with underlying respiratory diseases as was mentioned earlier.
Page 12 shows the overall domestic sales expansion efforts. New drugs grew JPY 5 billion, against the full year forecast as mentioned earlier. The April, December result for strategic products was up JPY 5 billion year-on-year which is almost in line with our plan.
Crestor and Irbetan faced generic launches. As Hanasaki mentioned earlier, generics are penetrating relatively early. The generic uptakes are earlier than expected in our impression. We would like to address the situation by focusing on new drugs. Regarding long-listed products, stockpiling of Rapiacta took place last year. The sales decreased in this portion, but the decline is mostly in line with our expectation. We completed the transfer of marketing rights for 21 long-listed products to Kyowa Pharmaceutical last year. As a result, the April, December result was down JPY 4.9 billion as we predicted.
In summary, except for Crestor and Irbetan, which faced earlier than usual generic entries, things were mostly in line with our assumption overall. We would like to continue to focus on new drugs.
Next is progress in overseas business described on Page 13. First, Symproic or Rizmoic. Symproic is the tradename used in the U.S., and Rizmoic is the trade name to be used in the E.U. The product has been launched in the U.S. last October. Through our alliance with Purdue, we ran various insurance coverage programs and patient support programs to achieve improved market access.
In Europe, our marketing authorization application submission has been accepted in March 2017 and is currently being reviewed.
As for Osphena, we collaborate with Duchesnay as was previously reported. Based on favorable results obtained in the vaginal dryness study, we are preparing for application for additional efficacy in the U.S. With an additional indication, we would like to maximize the value of the product.
Regarding Mulpleta, indicating for thrombocytopenia, we submitted NDA to the U.S. in December 2017, and to the E.U., in January 2018. We are now arranging prelaunch activities for the product.
Next is cefiderocol. We are currently conducting 2 global Phase III studies namely carbapenem-resistant study and HAP/VAP study in a smooth manner.
Please proceed to Page 14. As Hanasaki presented earlier, we agreed with our collaborating partner Roche on NDA submission policy in the U.S. Accordingly, we received approximately JPY 8 billion from Roche. Based on positive results of Phase II study in Japan and otherwise health study, we decided to file for NDA in the U.S. almost certainly. The JPY 8 billion payment reflects the achievement of this milestone.
Going forward, unlike the previous studies being conducted by Shionogi, future studies will be conducted by Roche. Through our collaboration with Roche, which was solidified by these activities, we'd like to maximize the value of the product.
Please turn to Page 15. Influenza is raging with full force this year. As flu patients soar, the current high-risk patient study is progressing very well. This will slightly increase our R&D expense. However, by combining R&D expense with SG&A in one unified expense budget, we'd like to perform total cost management so that we eventually hit the bottom line target.
Having said that though, because baloxavir and marboxil is an important product, we'd like to make necessary investments to accelerate its R&D as well as actively promote its prelaunch activities.
In summary, investments to growth drivers will be maintained or expanded, while targeting revenue and profit growth in fiscal 2017 through total cost management.
Page 16 shows our key achievements up to the third quarter for individual products. This one-page summary captures what I explained so far.
Please proceed to Page 17. This is a summary of the status of HIV franchise, which is an important pillar for Shionogi. Currently, the dolutegravir family maintains 30% market share in total and things are going very well. However, with the anticipated approval for bictegravir, ViiV is furthering their R&D efforts. For example, Juluca, a 2-drug regimen was launched in the U.S. last December. Moreover dolutegravir 3TC is being prepared for NDA submission with an expected launch in 2019. Those are all oral drugs. Many reports indicate that HIV therapies suffer very poor compliance, which ultimately, lead to the emergence of resistant strains.
In order to improve drug adherence, highly convenient cabotegravir plus rilpivirine, both of which are sustained-release injectables, is expected to be used as adjunctive therapy. With the ongoing Phase III study, we plan to launch the product in 2020. We initiated a study that requires the product be administered every 2 months instead of every month in conventional studies.
A Phase II study is underway to administer the product every 2 to 3 months for preventive administration.
Next on Page 18. As we have already announced the details in December 2017, I am going to skip the details in this presentation. In light of adapting the latest technologies such as IoT and AI, we have signed a strategic business alliance with Accenture, in order to reinforce the basis of IT organization and to drive talent development. This alliance will help improving IT literacy and business literacy across the organization to further promote innovation. We have almost reached the end of presentation. On shareholder return, as mentioned earlier, we are steadily acquiring our own shares. In an effort to maximize our value, we'd like to continue to increase shareholder return and to drive capital efficiency under flexible and agile capital policy going forward. That concludes my presentation. Thank you very much.
[Operator Instructions]
I have 2 question on Roche. One question is relative to your explanation in the first half financial results announcement. I remember you said perhaps, annual income from Roche will be about double of the JPY 10 billion. This time, you received JPY 8 billion. Is this the same thing as you mentioned before?
Yes, it is the same.
I see. In that sense, there'll be no income from Roche to come in the fourth quarter and the annual income from Roche will be JPY 18 billion instead of JPY 20 billion?
Yes. We received the payment in advance.
And my understanding from your presentation is that you will accelerate the NDA submission a little earlier than planned, regardless of the result of high-risk study overseas. Is it right?
Yes.
If that is the case, what will happen to your R&D expenses? Of course your R&D expenses will be offset by the income from Roche later, but will your net R&D expenses for the ongoing global study be reduced in your P&L accordingly?
We will continue to drive our ongoing high-risk clinical studies, but Roche will conduct all the new global studies initiated from now on.
So there'll be no change for the ongoing clinical studies, right?
You're right.
I See. And I have a question on the strategic alliance with Accenture. As this alliance would reduce the routine work in Japan, are you also aiming at cutting fixed cost in the future as an opportunity?
Yes, we are aiming at it.
How long will it take? And how much is the impact?
We'd like to refrain from commenting on a specific amount. And I don't expect to see the actual positive financial impact until next fiscal year but after that, we believe, we will started to see a positive effect.
I see. In your presentation, you said you are investing in R&D ahead of schedule, but SG&A expense has been reduced significantly. The annual spending for both items may fluctuate, but you will not adjust the deviation, is my understanding right?
Right. That's the direction we are anticipating.
This is Seki, I have a question regarding influenza in the U.S. Is the breakthrough therapy attached?
We haven't spoken about that yet.
Did you already have a pre-NDA meeting?
I don't know whether I should call it a pre-NDA meeting or not, but we are discussing with FDA.
If that is the case, do you think you will be in time for the next winter season?
It depends on the schedule arrangement with Roche. Therefore, unfortunately, I'm not able to give you a clear answer on that.
And when we previously had a conference call on the clinical trial results, you said you were planning to approach EMA as well, not only FDA. But so far, how do you see the situation? Based on your current otherwise healthy study and Phase II study in Japan? Do you think you can submit application to EMA just with these results?
In principle, when we look at market, the U.S. is a very important and significant market for us, which is very different from the EU. Therefore, I think we should focus on the U.S. to maximize the opportunities rather than being distracted by the European market by going ahead with the EU. I'm not saying that we will not go to the EU market, but rather currently, we are focusing on the U.S.
And sorry to ask you again, but what about the approval in Japan? How do you see the possibility to receive an early approval?
The final decision will be made by the authority. We are, of course, preparing for the possibility of an early approval.
Ms. Sawada, you only mentioned special committee on drugs. Some media reports call it the secondary committee. Is this something special?
No, they are the same.
I see. And in the Slide 16, on the left-hand side, it says an alliance with PeptiDream is making a progress in Project 2 and 3. Can you explain what it is?
Sorry. We cannot disclose the target, but it originally started with our low molecular drug discovery effort when we couldn't find good lead compounds. However, we gradually started to discover them within the project.
Does it mean that the optimization has been promoted?
Yes, we are able to find lead compounds against very difficult target at an earlier timing by utilizing PeptiDream platform. That is what we could actually see.
Did you actually find lead compounds or something earlier than that?
They are lead compounds. Both of them.
. Are they for infectious diseases, central nervous system or front ear? Any one of them, right?
Yes.
I see. By the way, gross profit for the quarter excluding royalty income was very good. Why is that?
Hanasaki speaking. As I said earlier, we had JPY 8 billion from Roche.
No, I mean, excluding royalty?
The word royalty in the presentation refers to HIV and Crestor royalty. Therefore, statement excluding royalty here does not include income from Roche.
But our calculation excluding all kinds of the royalty income still shows very strong gross profit. Any reasons for that?
Your question is about cost of goods ratio, right? There is a product mix effect. The sales mix of product with relatively higher cost-of-goods ratio such as Crestor and Irbetan went slightly down, especially Crestor sales went down. But the share of Cymbalta went up significantly year-on-year.
I am Kohtani, Nomura Securities. My first question is about Triumeq and Tivicay which I am a little bit concerned. When I look at the number of prescriptions, Triumeq has become flattish or rather it seems to be even declining. Instead, my impression is that Tivicay and Genvoya are growing. I believe the consensus is that Triumeq will not decline so much even after the launch of bictegravir. But how do you see the possibility of switching? How do you see the current situation? This is my first question.
Well in this therapeutic field, it is very rare to see patients under good medical control are willing to switch their medication. They are rather reluctant to switch their medication, so I don't think they will switch. Therefore, we think our challenge is around new patients.
So let me confirm, the reason why Triumeq struggles to grow is because of the new patients acquisition? Are you seeing the combination of Tivicay and Genvoya or Descovy is acquiring more new patients? And it is not because of switching of drug based on the current situation. Is my understanding right?
Yes.
Okay. My second question. Let's move on to Page 14, where it says Roche will conduct all global studies initiated from now on. Can you talk more about details of the future studies, or not yet? Sorry. I guess you may consider studies for a combination with Tamiflu or using clear-wave testing device. Do you think such studies may be conducted?
Well, there are various possibilities. I think, testing device studies are ongoing in parallel. I don't think we should put too much restrictions on testing device side for their benefit. This is my personal opinion, and we didn't talk about this with Roche, but personally speaking, we don't have to think too much about fairness to take an action in this area. We don't have any intention to stop them either.
I see. And I didn't understand cabotegravir intellectual property rights. My understanding is that, this is an injection to be used with rilpivirine injection. So I guess, 2 injections are needed. This is a nano-sized particles, with an average particle size of approximately 200 nanometers, a mixture of polysorbate 20 and polyethylene glycol 3350. I'd say it is not that innovative. For example, are you thinking about making a combination drug with lamivudine to make a single injection? And extend the term of patent?
Volume wise, it will be difficult. Are you saying you need 2 injections anyway?
Yes.
I see. The company called Achaogen submitted plazomicin new drug application and a PDUFA and FDA accepted it. Unfortunately, they made a move ahead of you in the area of urinary tract infection by multi-drug-resistant bacteria. Are you still planning an NDA submission for urinary tract infection or rather are you shifting towards treatments of hospital-acquired pneumonia? This is my last question.
It will take too much time to submit for hospital-acquired pneumonia, so we do not have any plan to wait that long. They submitted good data on plazomicin but there is a safety challenge specific to aminoglycoside. In that sense, we believe in the superiority of cefiderocol.
My question is about cefiderocol. The NDA submission for treatment of urinary tract infection is yet under preparation and Phase III study is currently undergoing for hospital-acquired pneumonia according to your material. It's been quite some time since you started to prepare for the NDA submission, and I heard that there were some issues in analysis, especially regarding the safety matter. Are the issues now cleared up?
No, we have no issues for that at all. We are currently discussing to include information that may be required by the physicians who actually use the drugs in their hospitals. We will talk more about that in our R&D meeting including the timeline for NDA submission.
I see. Let me just clarify whether you have already cleared up the issues.
We have no concerns on safety.
My first question is pertaining to HIV franchise. While Tivicay is performing well, Triumeq is stagnant. Therefore,, you mentioned that you're going to shore up Triumeq growth. I'd like to ask you some more details on measures to bolster Triumeq? My impression is that there has been no major change yet in the number of prescriptions. I wonder if such measures are already being implemented. Also, are those measures going to impact the number of prescriptions? That is my first question.
Looking at the trend of prescriptions, we start to see some changes although my interpretation may differ from yours. So we'd like to carefully monitor the situation going forward.
I have another question, which concerns the 2-drug regimen called Juluca. The drug was only recently launched. Shionogi's conventional way of thinking has it that 2-drug regimens will take time to penetrate the market, because they are new regimen. Does your outlook basically remain the same even after the launch? For example, physicians may be reacting positively to the product. Do you see any changes in your future outlook based on physicians' response so far?
We see no major changes in our outlook, however, HIV is now viewed as a chronic disease. From that perspective, guidelines will undoubtedly be heading towards reducing the number of HIV drugs. So it is up to us as to how much data we can accumulate from here.
I understand. Next regarding influenza. I heard your new product has passed through the special committee on drugs. Possibility of stockpiling may become an agenda item in the future. The current stockpiles are diversified therefore, I understand your anti-flu drug will be part of future stockpiles. Is my understanding correct? In terms of the actual stockpiling, when will it take place, at what timing in what quantity? Could you tell us how they are determined to the extent you can?
At this stage, the discussion of stockpiling has not started yet. The government stance is that approval for our new drug should precede any discussion about the stockpiling. Thus we need to wait for approval before starting the discussion.
Thank you. My final question relates to domestic prescription drugs. Namely Crestor, and Cymbalta. The sales figure for Cymbalta was revised upward in the first half, however, my impression is that the results for the current third quarter are not as strong as expected. On the other hand, the sales figure for Crestor was revised downward, but the progress is slow in the current quarter even against its revised figures. Those are my impressions. Could you elaborate a little bit more on Crestor and Cymbalta's progress versus forecast?
Regarding Crestor, as I mentioned earlier, generic penetration topped 50% in just 4 months, which was earlier than expected. Utilizing this orally disintegrating or OD tablets, we continue to work hard to close the gap with our full year projection as much as possible. On the other hand with Cymbalta, our activities in the pain area including collaborations with psychiatrist have relatively been modest, but to provide a more thorough explanation, we'd like to further concentrate our resources on the product.
I understand. I'd like to ask on your cost-cutting efforts. You mentioned increase in R&D expense is offset by cutting SG&A expense. I'd like to confirm that this does not warrant less money for new drugs. Do the increasing R&D costs means squeezed marketing budgets or do they not?
Our human health care division has built-in fluctuations among our products. Therefore, to your point, we see no major problem.
I'd like to ask you one question. In the financial results for the third quarter both the sales and operating income increased by 2.7%. Regarding the JPY 90.1 billion in operating income, based on your explanation, royalty income for the sales of HIV franchise and Crestor amounts to JPY 91 billion. Adding other royalties, the total royalty income comes to JPY 118.1 billion. By subtracting this from the operating income, you have a deficit of JPY 28 billion. In other words, without JPY 8 billion paid by Roche, you have a decrease in profit. To find out reasons for the decline by referring to the categories shown on Page 7 namely strategic products, new products and prescription drugs in Japan, which factor is dragging down the results most? Could you please let me know?
Of the prescription drugs in Japan, shown on Page 7, Crestor suffered earlier than expected generic entries, plunging the result significantly. And this had a large impact. In this fiscal year, accelerating a shift from Crestor Irbetan to new products holds the key. Our new products including strategic products namely Cymbalta, Intuniv and Symproic, will have more resources to drive growth for the remainder of the year.
The 3 strategic products are surely profitable, am I right?
Of course.
What about new products? Are they profitable?
For the lines below Crestor and other prescription drugs in Japan, sales dropped causing profit plunge, correct?
Sales resources will be concentrated on strategic products and be allocated to new products as well in order to increase the sales of these categories, that is our basic stance.
Page 4 describes factors affecting cost of sales. You mentioned, increased manufacturing of API. Is this a major factor for the increase of cost of sales?
Profitability is completely different between API manufacturing for dolutegravir and other product manufacturing. As we manufacture more API of dolutegravir, the overall cost of sales ratio will be directly and negatively impacted.
I understand. On another line regarding influenza, you are accelerating launch preparation. Certainly, you must consider future stockpiling as well as global expansion for the product. For the launch could you tell us in what quantity and in what time frame you can secure the product, may I ask?
Suppose we can launch the product by the end of this fiscal year, we don't expect this season will prolong that much. Therefore, we will be able to allocate enough for this year and secure enough for the next year. Thus, there is no concern about running out of stock.
To achieve supply responsibility, it is going to be a vertical startup, where a maximum production will take place right from the start. Am I right?
We anticipate and prepare for a maximum production.
I am Tanaka. I have one question. On Page 13, under Symproic, it says it was launched in the U.S. in October. In terms of the number of prescriptions in a given week, Symproic is still about 1/3 of Movantik. What is your current assessment of the launch in the U.S.?
We decided to partner with Purdue, because it has a strong sales capability for medical narcotics, however, as you know, medical narcotics businesses are facing strong headwinds so in that sense, we need to separate our activities from medical narcotics sales and establish our own communication. We are currently discussing our future strategy with Purdue.
So their strength in narcotics turns out to be a weakness in a sense?
Narcotics compounders are probably finding it very difficult to promote their products. So this current situation is slightly different from what we had expected.
Also regarding Mulpleta as well as Symproic, have you decided how to market those in Europe?
No. It is yet to be decided, but we consider we need to seek partners.
I am Nakazawa. I have 2 questions. First, regarding income from Roche, JPY 10 billion and JPY 8 billion each. In the first half of financial results announcement, we were told that almost equal amount will be paid over the next 3 years. Does this outlook still hold? That is my first question.
There is no major change to the outlook.
Will it always be JPY 10 billion in the first half and JPY 8 billion in the second half?
The amount of installment payments may differ each year.
My last question. On the profitability of your business in the U.S., we heard that you are aiming to make it profitable by next fiscal year. Do you have any change to this perspective?
It is our internal target that we are aiming for, and we are carrying out our plan. So our perspective remains the same.
I am Hashiguchi. I have one question. On baloxavir marboxil, it is said that Roche will conduct all the new global studies initiated from now on. Has this already been decided or was it recently decided? Also what are the factors behind your decision? There are various ways for life cycle management of the product. I understand you're going to run separate clinical studies. You can meet various needs of each region, including Japan in separate independent studies, and I see the benefit of it. But if Shionogi conducted studies just as usual, it will be more cost effective. So what are the factors behind your decision?
The decision has already been made, and it is included in the original contract where it says global studies. Of course, it can include studies in Japan and other countries, which can be handled by Shionogi. So in that sense, they are not necessarily independent.
With that, we'd like to conclude our conference call on the financial results for the third quarter of fiscal 2017. Thank you very much for taking time out of your busy schedule to attend this briefing. Thank you very much.