■Performance trends of Pharma Foods ＜2929＞

2. Trends by segment

(1) BtoB business

In the BtoB business, sales were 4,171 million yen, up 2.5% from the same period last year, and segment profit (operating profit before adjustments for company-wide expenses, etc.) was 743 million yen, up 6.1% from the same period last year. Although shipments of some Meiji Pharmaceutical products were affected by the Reiwa 6 Noto Peninsula Earthquake, sales and profits increased steadily, centering on the main force “Pharma Gaba (R).” Sales by item were 946 million yen for functional materials, up 16.0%; 372 million yen for functional products, down 51.8%; Meiji Pharmaceutical's CMO increased 11.2% to 2220 million yen; and CHC increased 30.5% to 632 million yen. Sales of “Pharma Gaba (R)” as a functional material have expanded both domestically and internationally. As for functional products, sales activities for new NB products such as “Clarity Labs” and “Sleep Labs” are being strengthened. As demand for alternatives to CMO increased due to the effects of quality issues and manufacturing deficiencies among generic drug manufacturers, stable order acceptance and improved profit margins progressed. CHC is strengthening sales of new Meiji Pharmaceutical brand products to drugstores.

(2) BtoC business

In the BtoC business, sales were 27,353 million yen, down 11.5% from the same period last year, and segment profit was 1,732 million yen (loss of 857 million yen in the same period last year). Sales by category were 18,918 million yen for pharmaceuticals and quasi-drugs, up 15.6% from the same period; 4,178 million yen for supplements, down 44.4%; and 3,972 million yen, down 40.2% from the same period for cosmetics. In terms of sales, the main “Pneumo (R) hair growth agent” and “DrCula” series remained at a high level, but in addition to putting back full-scale promotion of “New Z” and “Windproof Ventilation Seisan” due to a decline in the operating rate of production contractors and the occurrence of manufacturing delays due to shipment restrictions by raw material manufacturers, advertising costs were suppressed in supplements and cosmetics with an emphasis on profitability indicators, so overall sales fell below plan. The profit side turned into a surplus due to a drastic decrease in advertising costs. The number of regular customers for the Group as a whole decreased by 14.3% from the same period to 900,914. The number of regular customers decreased along with a decrease in advertising costs, but it remains at a relatively high level. Also, as a result of responding to law revisions, improving advertisement quality, and working to improve response quality at call centers, the number of consultations with the National Life Center about the Company Group in 2024/1 decreased by 87.5% compared to the same month last year.

(3) Biomedical business

In the biomedical business, sales were 117 million yen, down 15.2% from the same period last year, and segment profit lost 224 million yen (loss of 145 million yen in the same period last year). There is an operating loss due to the research and development stage centered on autoimmune diseases, but the trace protein analysis “Olink Target” service and “Olink Flex” service in the proteome analysis contract business contributed to revenue acquisition on the sales side. Furthermore, antibody drug discovery for autoimmune diseases is progressing smoothly toward the start of clinical trials (phase 1).

There are no concerns about financial soundness

3. Financial Status

On the financial side, total assets at the end of the second quarter of the fiscal year ending 2024/7 increased 787 million yen from the end of the previous fiscal year to 37,020 million yen. Mainly, cash and deposits increased by 694 million yen, and investment securities by 212 million yen, respectively. Total liabilities increased by 1,215 million yen from the same period to 27,817 million yen. Mainly, unpaid amounts increased by 792 million yen, and unpaid corporate taxes, etc. increased by 821 million yen, respectively. Total net assets decreased by 428 million yen to 9,202 million yen. Retained earnings increased by 408 million yen (768 million yen increase in recorded quarterly net profit attributable to parent company shareholders, decrease 346 million yen due to payment of dividends), but decreased by 851 million yen due to the acquisition and disposal of treasury stock. As a result, the capital adequacy ratio fell 1.7 points from the same period to 24.9%. A reduction in interest-bearing debt and an improvement in the equity ratio are desired in the medium to long term, but at present, cash and deposits are at a high level, and we believe that there are no concerns about financial soundness if we take into account the fact that interest-bearing debt is not a particular profit pressure factor.

(Author: FISCO Visiting Analyst Masashi Mizuta Exhibition)