Santen Pharmaceutical Co Ltd

TSE:4536

Earnings Call Transcript 2019-Q3

[Shigeo Taniuchi, executive]

Thank you very much. I would like to present the results of Q3 FY 2018 of Santen Pharmaceutical Company Limited which was announced at 3 p.m. today.

The second page, as you know, "Tenki ni sanyo suru" is our values of Santen.

Mission statement is by focusing on ophthalmology, we want to contribute to the wellbeing of patients, their loved ones and consequently to the society. So based upon these values and mission statement, we are developing our business globally.

The third page, this is the outline of the MTP2020, which is a midterm plan from 2018 to 2020. To become a specialized pharmaceutical company with a global presence and to construct a path for sustainable growth beyond fiscal year 2020 are the fundamental policies.

Profitability, customer satisfaction, organizational strength are to be increased and based upon that, we want to make progress in global business strategy, enhance the product pipeline and develop new treatment options and raise strength and efficiency of business framework.

We presented this MTP2020 in June and after that, I have visited Asia, EMEA, U.S. and, of course, the headquarters in Japan and various sites in Japan to explain about MTP2020, and we have united as a team to execute this.

As I will be explaining later in detail, from 2018, in Japan and Asia and EMEA, we have been outperforming the market growth.

DE-117 EYBELIS has been approved in Japan and from the second half, in the United States, DE-109 and DE-117 will start their clinical studies. So in terms of our pipeline, we have intensified our pipeline and we have been able to make a good start of MTP2020.

From Page 5. This is the Q3 FY 2018 financial overview. First, with regard to the revenue, in the Japanese market Eylea and Diquas, which are our key products, are growing continuously.

At the beginning of fiscal year 2018, there was a onetime inventory adjustment and there was impact from the NHI price cut, but these have been absorbed by the growth of our key products.

And, also, in Asia and Europe, we are enjoying continuous strong growth, and the consolidated total growth was -- by JPY 4.6 billion, 2.7% year-on-year.

With regard to the operating profit, we have been growing overseas, and also we have been able to make a cost optimization group wide.

With regard to the core basis operating profit, we were able to make JPY 35.1 billion. And, also, we have been making asset reduction and business reorganization. In the third quarter, the former headquarters and in Osaka plant sites have been sold. Due to this sale, we have been able to make a gain in the IFRAS -- IFRS basis we have incurred JPY 33.7 billion of operating profit, which was a 12% increase year-on-year.

And, also, we have agreed sales of plant and its operation in Finland, namely Tampere plant to NextPharma.

With regard to the net profit, there has been a decrease by JPY 4 billion, but this was due to onetime benefit of reduced corporate tax rate in the United States in the previous year.

To the annual forecast, both revenue and operating profit are making good progress.

Next, Page 6. This is the factors behind the Q3 FY 2018 revenue fluctuation in comparison with Q3 FY '17. In the Japanese business, Eylea and Diquas are growing very well, and excluding the negative impact from NHI price cuts, the revenue increased by JPY 5.6 billion or 5.4%, with this the market share is 46.9% and is still growing.

EYBELIS, which was launched in November, has experienced 2 months after the launch, and we have been able to record 50% of the institutions adopting this new product. And, also, Well Wash Eye, a new type of cleansing eye drop has been launched in December.

With regard to OTC, there has been a negative comparative impact from marketing campaign in prior year, and also decrease of foreign visitors due to the natural disasters and also the new China's e-commerce law, however, there has been a good progress in premium products for domestic market which have -- which has been mitigated these negative impacts, and year-on-year performance was -- has been flat.

With regard to surgical, in November, we began trial sales of new IOL product, LENTIS Comfort, this is to provide a comfortable vision across medium and long distances. It is a differentiated product that has been accepted in the market. With regard to this product, we will further focus, in order to expand our sales.

With regard to overseas business, likewise to -- up to Q2, we have been enjoying strong revenue growth in Asia. In China, a plus 23.4%. In Korea, plus 18.4%.

It's not only the market growth but in Asian region, we have launched 18 products. And we would like to continue to grow, focusing on new products.

In EMEA, this is Europe, the Middle East and Africa, Ikervis and glaucoma products are growing. The product -- glaucoma products will be further focused for a greater penetration, especially, in main countries like Italy and Germany. Through these performance in total, in Q3 FY '18, we have been able to enjoy a JPY 173.2 billion revenue, plus 2.7% year-on-year. This is the core operating profit. And due to cost optimization, we have been able to mitigate negative impact of COGS in Japan-pharma business.

In Asia, we have been growing the revenue and COGS expense management, and we have enjoyed more than 60% of why are -- on why core operating profit.

In EMEA, we have achieved 8% increased profit, by cost-optimization efforts. So a strong growth in overseas business, and group-wide cost optimization has offset in NHI price cut impact. And in total, in Q3 fiscal year '18, JPY 35.1 billion of OP has been recorded, and this meets annual forecast announced in May.

Page 8. This is a business trend in domestic market, between 2013 and 2018, it shares the sales revenue and also the operating profit before R&D.

We're on track to achieve a full year target in Japanese market. We launched EYBELIS in November, and also we will focus on the new IOL LENTIS Comfort. We elect to try to expand our value of the product so that we can grow fast.

Page #9 is for Asia market. As before, our products are outperforming the market growth, we are growing very steadily in this market.

COGS and [indiscernible] has been improved in the past and going forward, in addition to these we elect to introduce new product in these markets so that we can expand our business in Asian market and also in China.

Page 10 is about EMEA business. As I mentioned before, we are increasing our share of glaucoma markets and market is growing fast. Thanks to these, both revenue and operating profits are increasing, for example MicroShunt, it used to be MicroShunt, so our new name is PreserFlo MicroShunt and we've completed soft launch in Europe. In 2019, we would like to expand this product further.

We would like to improve our presence in European market and we would like to have a strategic marketing plan in European market and that will also contribute to other markets, including Asia.

Page 11. This is the forecast for 2018 full year. Our revenue is JPY 237 billion. Core operating profit is JPY 48 billion, there's been no change from the announcement made in May. We are on track to achieve our full year target.

This is the forecast for dividend for 2018. Our plan is JPY 26 and there's been no change from the announcement made in May. That's all for the third quarter and fiscal year 2018.

Now let's move on to status of Research and Development, Dr. Naveed Shams.

[Naveed Shams, executive]

Thank you very much. I'm going to be a little slow speaking, just to make sure that the translation can keep up, so I apologize in advance. [Foreign Language]. Thank you. So I'll start with DE-111, the Tapcom/Taptiqom product. We have just started a Phase III, the first patient was randomized into the trial in January of this month [Foreign Language].

We plan to complete the study in the first half of fiscal 2020 [Foreign Language]. The next study for the product and development is DE-117 or EYBELIS [Foreign Language]. We have launched the product in Japan, as Taniuchi-san mentioned [Foreign Language]. We have a Phase III study running in Asia, which will complete in the second half of fiscal '18 [Foreign Language]. We then, plan to use this data and data from the Japanese study for approval of this product in various Asian countries [Foreign Language]. For DE-126, we are still evaluating the positioning of this product. DE-128, which is our PreserFlo MicroShunt, we plan to file a PMA this year, calendar year 2019 [Foreign Language]. And we expect approval for the MicroShunt in 2020 [Foreign Language] .

Our DE-109 non-infectious uveitis program. [Foreign Language] the LUMINA trials, these are Phase III studies, [Foreign Language] was started in December of last year [Foreign Language] and we plan to complete the studies in the January-June time frame in 2021 [Foreign Language]. DE-122, the study is running, we are looking to completing this Phase II trial in the second half of fiscal '19 [Foreign Language].

I will skip the next 2 items because they have been launched and rather focus on DE-076C [Foreign Language] . This product was recently approved in Canada [Foreign Language] and we plan to launch the product in 2019 in Canada [Foreign Language]. Regarding epinastine or LeZion, [Foreign Language] we are looking for approval in the July-December time frame in 2019 [Foreign Language].

And finally, DE-127, the atropine for myopia [Foreign Language] we plan to complete the study in the second half of fiscal 2019 [Foreign Language].

Thank you very much, I'll be happy to answer any questions [Foreign Language].

[Unknown Executive]

So this concludes our presentations. Now we would like to receive questions.

[Operator]

The first question, Mr. Yamaguchi from Citigroup.

[Hidemaru Yamaguchi, analyst]

My name is Yamaguchi from Citigroup. Can you hear me?

[Unknown Executive]

Yes, we can hear you.

[Hidemaru Yamaguchi, analyst]

With regard to progress up to Q3 is my question. The revenue, looking at Q3, it seems to be a little slowing down but in total the progress is good. And, especially, in terms of cost you have mitigated the cost and -- but throughout the term how there -- have there been any fluctuations? And I think there may be some fluctuations, can you explain more?

[Shigeo Taniuchi, executive]

Yes. This is Taniuchi speaking. Let me respond to your question. With regard to Q4 forecast, I think, it will be following the annual forecast. And with regard to the fluctuations, one is with regard to the allergy market in Japan, from which timing how much of our products will be demanded and how long the allergy season will last, will be an -- factor of uncertainty. So the timing of the pollen and also the amount of pollen will become a factor, and there may be some fluctuations based upon this factor.

[Hidemaru Yamaguchi, analyst]

How about cost, R&D or SG?

[Kazuo Koshiji, executive]

This is Koshiji speaking. With regard to R&D, throughout the year it's JPY 25 billion and the progress, it's less than 70%. And, as of today, the clinical study plan are considered. In the fourth quarter, I think, we will be spending the total amount.

[Hidemaru Yamaguchi, analyst]

And how about SGA?

[Kazuo Koshiji, executive]

With regard to SGA, likewise. About 70% have been spent and throughout the company, we are working on reduction of expenses. However, having said so, how -- for example in Asia, and also some regions overseas, in the Q4, bonus or incentives to be paid to MR will be necessary, this will be a seasonal factor. And, therefore, together with the pollen amount, the -- there is a seasonal factor behind SGA as well, and therefore, it will be as the same as the forecast.

[Hidemaru Yamaguchi, analyst]

I have a question about EYBELIS. It looks like the number of account is increasing but there's been no announcement as to the sales, but I think it's less than JPY 100 million for a month, so it looks like JPY 200 million or JPY 300 million for 2 months. And going forward, I think its going to be penetrating further.

[Shigeo Taniuchi, executive]

Yes, this is Taniuchi. Yes, the number of the account is as you mentioned. As to the market share, this is a new mode of action and this a new compound. Therefore, we'll have to be very careful and we'll have to have a lot of scientific discussion with the doctors, so that we can be sure that this can be delivered to appropriate patients. As the study is in a very limited conditions, so we have to be very careful. So that's why we've been very conservative, because we are focusing on the appropriate use of this product. The market demand is very big, however, we've been controlling it and we've been making sure that how appropriately this -- this drug should be delivered to our patients. So that's the initial situation in terms of the sales, but I think we want to be patient.

[Hidemaru Yamaguchi, analyst]

So that's intentional, you are not pushing too hard in terms of this product?

[Shigeo Taniuchi, executive]

Yes, we've been very careful and conservative so that we can be sure that this drug is delivered to an appropriate patient.

[Hidemaru Yamaguchi, analyst]

Okay. The last question. I have a question to Naveed-san as to 126. You said that you are now evaluating the position and you said that you are going to elaborate on this.

[Naveed Shams, executive]

Yes, this is Naveed. Thank you very much for the question. The DE-126 product, as you know we have a very robust glaucoma portfolio [Foreign Language]. So we would like to make sure that the positioning of the product vis-a-vis the rest of our portfolio as well as the pacing between product launches is maximized, so we are going to continue to work on it. Foreign Language]

[Operator]

The next question, Goldman Sachs, Mr. Ueda.

[Akinori Ueda, analyst]

My name is Ueda from Goldman Sachs. My first question is with regard to DE-128. In 2019, you have completed a submission in the United States and so -- and you're planning to launch in 2020. And I think it's preceding faster than you had expected. And could you explain the reason why it has been accelerated? And what, kind of, a discussion have you had with FDA? And what are the timing of disclosing your data?

[Naveed Shams, executive]

So we always have had a range that we were comfortable with, in terms of filing and launching the product [Foreign Language]. The second is that our submission is in a modular form, which means we are submitting as we complete the various sections of the file.[Foreign Language].

And finally, we have guidance from the agency that they can make a decision on all of the data collected up to a certain point this year [Foreign Language], which means that most of the data used to get to -- for approval, is going to be month-12 data [Foreign Language]. And so that is why -- the package will include more than 12-month data, of course, but bulk of the data will be months 12 and, therefore, we can now file faster than we thought [Foreign Language] .

[Akinori Ueda, analyst]

With regard to Phase II, III data announcement, do you have any plans for the announcement of such data?

[Naveed Shams, executive]

We have not made any decision. [Foreign Language]

[Akinori Ueda, analyst]

Another question is also related to 128. You're planning to launch it in 2020. So as to the preparation of American business, the cost is going to increase from the next year for this or if you have any plan?

[Shigeo Taniuchi, executive]

This is Taniuchi speaking. Yes, to have the launch in 2020 we will have to make preparation starting in 2019. But how we are going to market this is still under discussion. So when the time comes we will make an announcement.

In any case, of course, probably a cost will incur and already now, in March, there'll be a Glaucoma World Conference in Australia, in that conference, we are planning some activities for PreserFlo. Starting from fiscal year 2018, we will have to spend to prepare for the launch of this product. And as to the U.S. market, we will explain the detail of how we are going to market it in the U.S. market when the time comes.

[Akinori Ueda, analyst]

The last question. It's about OTC, for the first question and second question, there are many special occasions but -- now it's 12% to 13%, it's increasing. So is it now back on track? If you can elaborate on the current situation of OTC?

[Shigeo Taniuchi, executive]

Taniuchi speaking. As to OTC, a new product or Japanese market [ boteh ] or medical series, those are progressing very well. So those products are on track. But modest difficult the forecast is inbound needs because it's fluctuating, it's been fluctuating a lot. If you look at the numbers alone, it may be difficult for us to many -- make any specific comments. But as far as our products are going, they are progressing very well and they're on track.

[Operator]

The next question, UBS, Mr. Seki.

[Atsushi Seki, analyst]

My name is Seki from UBS. With regard to Asian business, in the 3 months from October to December the revenue growth is in the -- in 1 digit. And was it because of a high inventory rate? Or was there any special factor behind this?

[Shigeo Taniuchi, executive]

This is Taniuchi speaking. This is due to China. Especially, in December, the wholesalers in China, at the end of the year, they were trying to reduce their inventory. Therefore, in terms of shipment from October to December compared to last year, there was some inventory adjustment.

[Atsushi Seki, analyst]

As a follow-up question. So there was a greater reduction of inventory compared to the other years?

[Shigeo Taniuchi, executive]

Yes, that is correct.

[Atsushi Seki, analyst]

My second question, this is to Dr. Shams, as a follow-up question. One, with regard to 128, so data for the filing is already acquired, is my understanding correct?

[Naveed Shams, executive]

So this is Naveed. Thank you for the question.[Foreign Language]. The data for the filing is almost collected. We are going to now prepare the data for a database lock and filing, and so that would happen in the near 2 to 3 months, approximately, if everything goes okay. And then we'd follow that with the filing [Foreign Language].

[Atsushi Seki, analyst]

My third question. Looking at the balance sheet, the cash is accumulated more compared to the past, and with regards to the stock right now, share buyback -- is this share buyback expected?

[Unknown Executive]

With regard to this question, I cannot answer by yes or no, but in the mid-term policy, first of all, investment for growth will be prioritized. That is all I can say at this point of time, thank you.

[Operator]

The next question is from Mr. Sakai from Crédit Suisse.

[Fumiyoshi Sakai, analyst]

My name is Sakai. I have 2 questions. The first question, it's about EYBELIS, you said that you'll have to be very careful in marketing this product. And you have other products for glaucoma, mainly Tapros and Cosopt. So what's the difference in terms of the marketing of those products? Or what's the positioning of those product? The initial sales has been slow and you said that this is because you've been very careful about 6 months or 1 year ahead. As a product, how much do you think it will grow?

[Unknown Executive]

Yes, in order to explore that, we've been talking and communicating with doctors. Glaucoma is, as you know, is a lifetime disease. Patients have to try to maintain their vision for a long time. Therefore, they have to use a lot of products, sometimes single product and sometimes combine products or sometimes -- some other time lose combination and the order or the combination of products are -- there are so many of them. Prostaglandin, FP and tafluprost and latanoprost, those products are now first-line products, and they are very powerful products in terms of the efficacy. But at the same time, there is FP specific [ now ] respond the problem. And also, there are some safety issues, like eyelash changes.

EYBELIS is -- it has a new mechanism of action. And efficacy is same, however, the safety profile is different. So what is the patient profile? Who's appropriate for this patient? Do we have to use this for new patients? Or if patients want to switch when or how they should switch? So there are many -- a lot of options or combinations. So now we are exploring the best way to use this product. It's not that we are worried about cannibalization, we just want to be careful in defining the positioning of this product. So there is also an -- cautious issues and -- because for those patients who are worried about the side effects of other products maybe we can use this product as a first line. So those are the situations now. We will like to carefully watch the situation of the patients and the treatment, an EP2 receptor, this is a new mechanism of action and that's how we want to position this product.

[Fumiyoshi Sakai, analyst]

The second question is about EMEA market. From the first to the third quarter, if I look at those figures on Page 11, the core operating profit -- the gross of core operating profit, that there is an absolute number and there is a progress up to the third quarter, I think it's relatively slow. Is this because former mark product? There may be some saturation and because of the saturation this being slow? Or is there any other factors which is dragging the sales? My question is, do we have to worry, especially, in European market?

[Unknown Executive]

As to European market, of course, those mark products and those mark products are mature products, so we are suffering from price cuts. However, in response to these, we've been developing preservative-free products. For unit dose, the single-dose product, it's not being very profitable, so we've been changing it to multi-dose, preservative-free products, in that way we've been trying to secure profits. Those are the measures we have been taking in European markets. So even if the sales is going down, we are increasing our profit. So the profits being better than expected, so now it's a better structure.

As to 2018, there was another factor in Russia. In Russia, there was an old product which was an OTC product and it declined a lot because of the competition. And there's been a lot of fluctuation. This is a very highly volatile OTC product and this product was not doing very well, so that's the one reason. In -- it accounts of 40% of the sales in Russia and that's relatively a big product in entire European market and that's why you may think that the sales been slow. However, in many other products we've been enjoying double-digit product end of sales growth, I mean, the growth in Italy and Germany and the U.K. Thanks to eye chemists. So that's the situation.

[Fumiyoshi Sakai, analyst]

With regard to MicroShunt, this time you have a new name, preserve -- PreserFlo, and in Europe, you say, it's a still a soft launch. But with regard to their hard launch or full launch, will it be in 2019?

[Unknown Executive]

So now it's soft launch. So in 6 or 7 institutions, we're selling this PreserFlo and the revenue is more. But in 2019 fiscal year, we would like to increase a step-by-step. It's not as advanced as hard launch but it's like a prelaunch. And people who can cover Swiss and Austria have joined us and they will be visiting institutions -- new institutions in these countries and that will happen in 2019. And so the hard launch or full lunch will be in 2020. And we -- in fiscal year '19, we want to increase the number of countries and we want to work on the infrastructure of the market. Thank you very much.

[Operator]

The next question, Mr. Hashiguchi from Daiwa Securities.

[Kazuaki Hashiguchi, analyst]

This is Hashiguchi speaking. The first question is with regard to China. You said that the wholesalers' inventory was reduced at the end of the year. I would like to ask you, what is the background behind this? Is it because of the changes in the environment? Or is it because of a specific wholesaler's management condition? And also after this, how are you going to prepare yourselves? When the inventory returns, is there going to be some impact? Unless you know the reason behind this inventory reduction, you will not be able to prepare yourselves.

[Satoshi Suzuki, executive]

This is Suzuki speaking. With regard to the inventory reduction at the end of the year, we do not know the situation of each individual wholesalers. But since April, there has been a system reform and there is a control that is being induced by the government. And it is a system reform which is a tailwind to us. The numbers are returning from January, so we feel that this is a good situation for us.

[Kazuaki Hashiguchi, analyst]

You said that this is a good situation for your company, why do you say so?

[Satoshi Suzuki, executive]

The reform that is ongoing is, for example, bioequivalent testing and, also, a large scale insurance integration. With regard to our branded products and high-quality products, we'll be encouraged by this system reform. On the other hand, our products with quality problem will be eliminated. With our products, when we look at our revenue with a growth of more than 100%, it seems that behind this phenomenon there are delisting of local products and this situation will be accelerated.

[Kazuaki Hashiguchi, analyst]

The second question is about healing in China. In the second quarter, the sales increased but as compared to the second quarter, in the third quarter, it's declining. In the second quarter, the list has been changed that's compared to competitors. The indication was different for healing and that's why there was a lot of demand. But for the third quarter, do you think this level will continue going forward? Or because of the list change, do you think that speaking it will decline further? What's the trend?

[Satoshi Suzuki, executive]

This is Suzuki speaking. Hyalein grew dramatically at one time and that's because the PSL institute was delisted.

And on the other hand, for dry eye, this products increased in demand. And that situation has been subsided. So there was a one-off condition back then.

[Operator]

The next question from Nomura, Mr. Kohtani.

[Motoya Kohtani, analyst]

My name is Kohtani from Nomura Securities. The first question, DE-117. I think, you said it before, of course, this is the new mechanism of action, so I don't think the initial sales would be very big. But as to this product, my biggest concern is as packaging success in macular edema. Of course, this is problem for IOL patients, but what's the situation now? Are we seeing the macular edema patients? If you have any safety information -- if there is any difference in terms of the data between the clinical situation and the study? And, I think, because of this side effect, you've been very careful, but at what timing or when do you think you can be very aggressive in marketing this product?

[Shigeo Taniuchi, executive]

Taniuchi speaking. As to macular edema, this can happen for FP patients and patients without IOL as well. So as to macular edema, doctors are not that worried because this happens anyway. And as to the current situation, we are not in a position to disclose the numbers in terms of the safety now. But in a clinical setting, the anterior inflammation, the sleep [ lump ] will be used to check the inflammation, and if there is inflammation we ask doctors to withdraw or stop the medication. So we are asking doctors to be very careful, especially, about inflammation of the eye. And the mechanism of action is different from FP, so inflammative macular edema is being observed. However, there have been no side effects, which is common with FP. So that's the situation now.

[Motoya Kohtani, analyst]

I think you are getting feedback. So, I think, the pigmentation is one difference between FP and this product, and the conjunctiva problem, what do you think? Is there any feedback?

[Shigeo Taniuchi, executive]

This is -- these are the comments that we have got from doctors, so this is just for your reference. As to the conjunctiva, this is an issue which is often seen, so doctors are not very worried. As to pigmentation and eyelash problem or the deepening of the cell [ caps ] this is a problem not only for women but also for male patients. So there are a lot of potential issues according to doctors' comments and patients' comments. And this is a disease which can affect a walking age population, so many patients being very sensitive with those side effects. So that's what we have learned. But with 117, this product hasn't got such side effects and that's very good for the patients. But those patients who are very worried about those side effects, some are saying that this can be used as fastline, so doctors are saying that now they have a multiple number of options as fastline. So going forward, we elect to explore how better we can deliver this product.

[Motoya Kohtani, analyst]

The second question, the PreserFlo. I would like to ask you -- maybe I overheard, I think FDA only accepted 2-year data, but now they say that when your data is sufficient, and I would like to ask you the background behind this?

[Naveed Shams, executive]

Hi, this is Naveed, Thank you for the question. [Foreign Language] Honestly, we don't know what the FDA is thinking, but I can tell you that the device -- that our device based on a lot of different characteristics [Foreign Language] is different than the run of the mill MIGS devices currently on the market. [Foreign Language] So the 24-month guidance probably does not apply to PreserFlo. [Foreign Language] And by the way, as I've mentioned, bulk of the data or all of the 12-month data will be the basis for the file, but we will have significant amounts of 24-month data as well [Foreign Language].

[Motoya Kohtani, analyst]

So when you compare your device to the other MIGS device, I think trabeculectomy -- with regard to trabeculectomy, I think you don't need to receive a new training with the PreserFlo and is that the reason why maybe 12-months' data is sufficient rather than 24 months?

[Naveed Shams, executive]

There is a -- listen the beat, again. Thank you for the question, again. [Foreign Language] The major difference is that, first of all, we are going head-to-head against trabeculectomy, which is a standard of care, so we have a well-controlled study [Foreign Language]. And to the best of my knowledge all of the currently available MIGS devices are used in combination or secondary to cataract surgery. [Foreign Language]. And so it's difficult for anybody -- because of -- cataract surgery has an IOP lowering effect on its own, it becomes difficult to assess the effect of the device [Foreign Language]. Hence, a longer study is required. [Foreign Language] Thank you.

[Motoya Kohtani, analyst]

And my last question, so 2020 is the time we have to think about the launch. So we were interested in cost. So those doctors who are doing these kind of surgery, I think they are very familiar and comfortable with these surgery. And the number of institution is not that big. And I don't think that the number of doctors who can do this is limited and I don't think it will incur a lot of cost.

[Shigeo Taniuchi, executive]

Taniuchi speaking. As Shams mentioned, this is often used with cataract surgery. So we will have to cover those [ indications ] who are doing cataract surgery and that's same for U.S., Japan, Europe.

And as to PreserFlo, this is only for glaucoma surgery doctors. So as compared to MIGS and other medications, the number of institutions may be limited. In the U.S., it's about several thousand institutions but not like hundred of thousand of institutions. So going forward, we will have to create a model on how to go to those institutions and that will be reflected in the numbers in the future.

[Operator]

People who are waiting for the question, but next one will be the last question from Morgan Stanley MUFG, Mr. Muraoka.

[Shinichiro Muraoka, analyst]

My name is Muraoka, from Morgan. My first question. We've been talking about European and Asian market and it's been slow but we don't have to worry about it. So in order to achieve this year's target, we don't have to worry too much about the slow progress in Asia and Europe?

[Shigeo Taniuchi, executive]

Taniuchi speaking. Yes, correct. Of course, there are many volatilities -- potential volatilities. In Asia, we've been seeing a very good trend since April but, I think, it will be growing steadily. And the current figure is very good as well. The overall trend in Europe is also okay. We elect to achieve our target by controlling the cost, so we are on target.

[Shinichiro Muraoka, analyst]

The last question. There was a share buyback question. And Mr. Koshiji said the company was to prioritize -- and the investment, and as to JPY 150 billion strategic investment, there's been no change in this plan. So you'd like to maintain at this level of investment for the future?

[Kazuo Koshiji, executive]

Koshiji speaking. We haven't officially mentioned the figure of JPY 150 billion in investment. But that level of investment may be possible without affecting the financial foundation of a company. So there was a question about share buyback. But as to share buyback, we want to prioritize investment for now. As I mentioned at the midterm plan, we elect to maximize shareholders' value, and we elect to maximize the share prices. We've been very serious about it. And the cost of shareholders' return, we've been always discussing about it. So that's our situation, but considering a need and wish for investment we decided not to do share buyback for now or increase the dividend. So as of now, we think it's too early to do these things.

[Unknown Executive]

[Foreign Language] Thank you very much for your questions. With that, we would like to conclude the conference.

Thank you very much for your attendance.