Impact of COVID-19 on Clinical Trials and Business Performance

「In Japan, the clinical-trial environment improved after COVID-19 was classified as a Class 5 disease, and the company steadily completed contracted projects and recognized revenue. However, revenue declined year on year because existing projects were canceled in the first quarter and new orders did not materialize as expected.」

「In Japan, the clinical-trial environment improved after COVID-19 was classified as a Class 5 disease, and the company steadily completed contracted projects and recognized revenue. However, revenue declined year on year because existing projects were canceled in the first quarter and new orders did not materialize as expected.」

「In Japan, the COVID-19 pandemic was classified as a Class 5 disease, improving the clinical-trial environment, and the company has been steadily completing contracted projects and recognizing revenue. However, revenue declined year on year because existing projects were canceled in the first quarter.」

「In China, although some contracted projects were delayed in the first half due to the impact of lockdowns under the zero-COVID policy, revenue and profit increased year on year, partly due to the weaker yen. In Taiwan, although clinical-trial progress in some existing contracted projects was delayed in the first half due to COVID-19, revenue increased year on year as new projects also commenced. Operating profit also turned positive as the company continued to reduce costs.」

「In China, delays in the progress of some contracted projects due to lockdowns under the zero-COVID policy resulted in a slight year-on-year decline in revenue and lower operating profit on a local-currency basis. However, the weaker yen resulted in higher revenue and operating profit on a yen-denominated basis. In Taiwan, revenue declined year on year due to delays in clinical-trial progress in some existing contracted projects as a result of COVID-19 and other factors, but the operating loss decreased substantially as the company pursued cost reductions.」

「As a global CRO originating in Japan, the Group operates in 18 countries, including Japan, Asia, the United States and Europe. The operating environment continues to differ between regions depending on the status of the COVID-19 pandemic and progress with vaccinations.」

「During the second quarter of the current consolidated cumulative period, infections with the Delta variant spread rapidly in the United States from July onward, but economic activity improved as vaccinations progressed. In the company's U.S. business, the impact of the COVID-19 pandemic declined substantially as initially anticipated. Performance continued to recover from the second quarter of the previous fiscal year, supported by the steady completion of existing contracted projects, additional revenue recognition resulting from contract changes, and revenue contributions from multiple projects won during the current period. Revenue and operating profit reached record highs for a second-quarter consolidated cumulative period, resulting in a substantial year-on-year increase in revenue and operating profit.」

「In addition, infections with the more transmissible Delta variant of COVID-19 have been rising rapidly worldwide, including in the United States, Europe, Japan and Asia, and the impact of the spread of COVID-19 on economic activity has once again become more uncertain. During the first quarter of the current consolidated cumulative period, economic activity in the United States improved as vaccinations progressed. In the company's U.S. business, despite the continuing impact of the COVID-19 pandemic, performance continued to recover from the second quarter of the previous fiscal year, supported by the steady completion of contracted projects and additional revenue recognition resulting from contract changes. Revenue increased substantially year on year, and the business became operating-profitable.」

「The U.S. subsidiary responded to these developments promptly, achieving stable operating profitability from August 2020 onward. In Europe, performance was significantly affected by the COVID-19 pandemic, but signs of recovery emerged in the fourth quarter, and the company ultimately secured an operating profit. In Japan and Asia, the company was affected by the COVID-19 pandemic and revisions to pharmaceutical companies' development plans, including the narrowing of development projects, and was unable to make sufficient progress in securing orders that would contribute to revenue for the fiscal year.」

「As a Japan-originated global CRO operating in 15 countries across Japan, Asia, the United States and Europe, our group's operating performance during the nine months ended the third quarter of the current consolidated fiscal year and the current situation have begun to differ by region due to differences in the status of COVID-19 and the responses to it in each region.」

「In addition, pharmaceutical companies began temporarily freezing new development projects from the fourth quarter of the previous fiscal year due to the spread of COVID-19. This resulted in insufficient orders secured to contribute to revenue for the cumulative second quarter of the current consolidated fiscal year, while pharmaceutical companies continued to narrow their development pipelines after the start of the current fiscal year. Consequently, new orders remained below expectations.」

「To meet pharmaceutical companies' global development needs, our group has established and expanded a global contract research organization structure spanning Japan, Asia, the United States and Europe. As a result, our main operating base has shifted from the single Japan base at the time of our establishment to three core regions today: Japan, the United States and Europe, primarily Germany, France and Spain. Consequently, during the first quarter of the current consolidated fiscal year, the global spread of COVID-19 affected our group. In the United States and Europe, lockdowns restricted movement and other activities, bringing economic activity almost to a standstill, while in Japan a state of emergency was declared and people were asked to refrain from nonessential outings. As a result, restrictions on visits to medical institutions made some clinical trial operations difficult to conduct, and delays in the start of clinical trials for newly acquired projects prevented the collection of the order backlog from progressing, resulting in timing shifts in the recognition of sales.」

「In the fourth quarter, the global spread of COVID-19 made some clinical trial operations difficult to conduct due to restrictions on visits to medical institutions and delayed the start of clinical trials for newly acquired projects, resulting in timing shifts in the recognition of sales. Pharmaceutical companies also temporarily froze new development projects.」